Cryptocurrency

[Darth_Uno]

Thoughts from the tribe? I've actually done well on it this year, by pure dumb luck. Discussion, especially by anyone who knows more than I (which is a low bar to hurdle), is welcome.

With the explosive acceptance of crypto I'd wager the US govt will create a digital dollar at some point very soon. I mean, most dollars at this point are just numbers on a screen anyway.

[David S.]

Oh to have started 10 years ago.

I've dipped my toes into the waters and I'll probably drop a significant amount (for me) in the next month. I'm conservative so my "investment" money will go into classic Bitcoin and Ethereum. (Most of the currencies in circulation are sketchy)

There's something to be said for a currency that's not inflationary and a payment system that can't be censored/cancelled by the big tech, banks and payment processors.

[joshs]

Currency that helps prevent financial irresponsibility by our government is pretty exciting. Hard money could hopefully return us to sane fiscal policy.

I agree on digital dollars being inevitable, but fiat digital currency kinda defeats the point. A lot of people who are into crypto don't even like that it's now possible to get bitcoin futures because of concerns over price manipulation.

[JCS]

Following with interest. I had some coworkers invest their stimulus checks in crypto and it turned into 6 figures.

I’m late to the game but learning. The tough thing for me is knowing if/when I should sell. Currently I’m just buying and diversifying my portfolio with different cryptos. Some really risky ones like safe moon and shiba and some more stable ones like bitcoin and ethereum.

[Nephrology]

Reeks of massive bubble behavior. Anticipate lots of pain and lost savings to tulip mania 2021.

Fundamentally zero value as actual currency, 100% value in speculative buying/selling. It's all fun and games til the music stops. If you think you can time the market, have at it. Recognize it is gambling and spend accordingly.

[CleverNickname]

Fundamentally zero value as actual currency, 100% value in speculative buying/selling.
There's a big difference between BTC & ETH and some random shitcoin pump & dump that was started last week.

[David S.]

Getting Started with Crypto.

1. What is crypto currency? Watch the first three videos in this series. (Part 4-6 are a direct advertisement for DASH, which really isn't worth bothering with)


https://youtu.be/e7UwwcCKj4Y

2. How to buy crypto currency. I've chosen Coinbase. It's simple and easy. Create an account, link your bank account to it (you can't buy with a credit card), select BUY/SELL to buy some crypto. Purchase transactions take about a week to process. Coinbase will charge you a small transaction fee.

3. What to buy.
-Bitcoin (ticker: BTC) is the Glock of the crypto currency world. It's where I choose to put the bulk of my crypto that's earmarked "investment." There were some issues with transaction speed and expenses a couple years ago. I'm not clear on whether that has been resolved or not, but I keep a bit of Litecoin (LTC) for small transactions.
-Ethereum (ETH) is also a solid choice with some interesting potential uses beyond the scope of this post.
-Tether (USDT) is tied directly to the dollar. I wouldn't personally hold money in Tether, but it does make transactions across certain trading platforms fairly simple.
-There's a few notable currencies that specialize in making transactions extremely private.
-There's hundreds or thousands of others, most of which are complete garbage (shitcoins ;) ).

3. Holding your crypto currency.

As was mentioned in the videos at the top of the page, you need a place to store your keys (twenty to thirty character alpha-numeric codes that are kinda sorta like account numbers).

- You could memorize them or write them down. There's obvious risks to forgetting or loosing them.

- You could hold it on the exchange (Coinbase, etc). You can also send or receive money with an exchange. This is the simplest, but least secure method. The downside is they hold your private keys, not you. Much like a bank, if they get hacked or if the government bangs on Coinbase's door looking for info, you loose your crypto and/or your privacy.

- Online wallet. This is a separate app for your computer/phone/device that holds your keys securely and allows you to transact with that money. You hold your private keys. The good wallets deny themselves access to your wallet so it's much more hacker resistant and it's my understanding that they couldn't get the info if they wanted to. The downside is, they can't help you recover information either. I've used Jaxx Liberty (https://www.jaxx.io/) and am now experimenting with Exodus (https://www.exodus.com) Wallet. I've been happy with both. There are other solid options that are easy to use.

These are the two systems that I'll be using for the foreseeable future. I buy on Coinbase. As soon as funds become available, I transfer it off Coinbase onto my wallet app. While many wallet softwares will allow you to buy/sell crypto directly, I understand that keeping those operations separate is more secure and private.

- Hardware wallet. That's the bank vault. It's a separate physical device that holds keys. (example (https://trezor.io)) It's the most secure but also most difficult to access. I don't use one yet.

4. Transacting with crypto.

When you purchase crypto, you're given a private and public key.
- If you want to send money to Bob, the wallet automatically uses the private key to make that transaction. You select SEND, enter they amount you want to send, input Bob's info (public key), verify you got it right, and hit SEND. Use Copy/Paste or the provided QR code to make sure all is well.

- You can give anyone your public key. All they can do with it is send money to it.

The whole process is very easy. If you would find screen shots helpful, let me know.

Shameless plug: If you sign up on Coinbase and buy at least $100 of crypto using this link, we both get an extra $10: Coinbase (https://www.coinbase.com/join/splain_1)

Cheers,
D

[MickAK]

I made a lot of money off of it.

I currently have zero holdings and I don't intend for that to change.

When people struck it rich in the Gold Rush days some of them invested their luck in saloons, general stores and rooming houses. Some went back out mining trying to get even richer. The former's descendants have generational wealth and the latter's descendants have meth habits.

I decided to take that lesson.

[Nephrology]

There's a big difference between BTC & ETH and some random shitcoin pump & dump that was started last week.

Not realty. Neither can effectively function as currency, both have value based purely on speculation. Those two are better established perhaps but fundamentally no different

The fact that we’re talking about them on P-F is a sign that the top of the market probably isn’t too far off

[joshs]

Not realty. Neither can effectively function as currency, both have value based purely on speculation. Those two are better established perhaps but fundamentally no different

The fact that we’re talking about them on P-F is a sign that the top of the market probably isn’t too far off

You know that guy that never thought 280 character messages would catch on . . .

[RevolverRob]

I've been looking to invest in cryptocurrency tracking technology. Things that can track exchanges will be very useful tools in the near future.

While I tend to agree with Neph that the value of Crypto is hyper inflated due to speculation; the exchange of crypto for goods, particularly illicit transactions, has made it a fundamental staple of our world now. Thus, to me, the future of crypto is tracking those transactions. Bitcoin and crypto set off a new evolutionary arms race. The near term future is in tracking crypto transactions. And then it's in the new crypto currency that emerges to counteract.

[jh9]

Not realty. Neither can effectively function as currency, both have value based purely on speculation. Those two are better established perhaps but fundamentally no different

The fact that we’re talking about them on P-F is a sign that the top of the market probably isn’t too far off

Yeah. BTC didn't hit $65k/coin or whatever due to some intrinsic value someone discovered. There's a theoretically finite supply and people with money bought a ton of it. If it was still just for nerds it'd be worth less than a pizza. Wall St buys and sells all the time. By the time common folk realize it's in freefall and trying to catch a falling knife it'll be too late. It's a penny stock that got big. Everyone wishing they shoulda got in on bitcoin 10 years ago could just as easily wish they got in on NFLX in 2005.

That's not even touching the monetary cost of the power used in 'mining'. Or the fact that a zero day security vulnerability can take the value to zero in an instant. Or the fact that Elon Musk can noticeably manipulate the value of it with a tweet. "Crypto" still has the worst aspect of fiat currency-- no intrinsic value-- but is dependent on things that do have intrinsic value (i.e. electricity and hardware) to keep it running.

The USD has a global hegemony backing it. Stocks have value as they are ownership of the underlying company that is presumably valuable because it makes or provides something. (Non-Junk) Bonds have value because the backing entity promising capital plus interest has value because of something they make or provide. Crypto has none of that. It's random numbers that people want enough other people to agree on having value with nothing else involved, and it exists in a world where we can't even agree that a global pandemic is both real and probably not great for us. Once the speculators move on to the next shiny it's going to be as valuable as Enron stock.

[Darth_Uno]

The fact that we’re talking about them on P-F is a sign that the top of the market probably isn’t too far off Like the old saying goes, when's the best time to sell? When your cab (guess it'd be Uber now) driver tells you to buy.

I started the thread because I actually had a customer ask if he could pay for a 60k job with Litecoin. I told him we're not set up for that yet. I'm not opposed in principle. But I can't just sit on it and hope it appreciates (I need those funds for cash flow) and I can't pay my subs and vendors with LTC. And of course there's the risk that my 60k is worth 30k a week from now.

[JRB]

Yeah. BTC didn't hit $65k/coin or whatever due to some intrinsic value someone discovered. There's a theoretically finite supply and people with money bought a ton of it. If it was still just for nerds it'd be worth less than a pizza. Wall St buys and sells all the time. By the time common folk realize it's in freefall and trying to catch a falling knife it'll be too late. It's a penny stock that got big. Everyone wishing they shoulda got in on bitcoin 10 years ago could just as easily wish they got in on NFLX in 2005.

That's not even touching the monetary cost of the power used in 'mining'. Or the fact that a zero day security vulnerability can take the value to zero in an instant. Or the fact that Elon Musk can noticeably manipulate the value of it with a tweet. "Crypto" still has the worst aspect of fiat currency-- no intrinsic value-- but is dependent on things that do have intrinsic value (i.e. electricity and hardware) to keep it running.

The USD has a global hegemony backing it. Stocks have value as they are ownership of the underlying company that is presumably valuable because it makes or provides something. (Non-Junk) Bonds have value because the backing entity promising capital plus interest has value because of something they make or provide. Crypto has none of that. It's random numbers that people want enough other people to agree on having value with nothing else involved, and it exists in a world where we can't even agree that a global pandemic is both real and probably not great for us. Once the speculators move on to the next shiny it's going to be as valuable as Enron stock.

I read countless posts like this many years ago, so I sold my 3 BTC coins when they were just under $2k each. I was happy for then-solid gain, and I felt like I was dodging a bullet. Then it just kept going up and here we are today.

My conclusion is that crypto is an entirely different thing than buying ETF's or stocks or anything like that, and anyone considering crypto through the lens of typical Wall Street investment strategies has been perpetually doomed to get it exactly wrong.

[NWshooter]

I’ve been mining all year on an Apple IIc

Not a lot of success

[TGS]

I’ve been mining all year on an Apple IIC.

Not a lot of success

Gotta get yourself a turbo encabulator, it'll make the difference.

[jh9]

just kept going up and here we are today.

78788

Yeah, I know. Lies, damned lies and statistics. Move the time range around to tell whatever story you want. Wind the clock back to when Enron was publicly traded if you want to see a spectacular burnout.

What I'm getting at is "just kept going up and up" is not unique to bitcoin.


My conclusion is that crypto is an entirely different thing than buying ETF's or stocks or anything like that, and anyone considering crypto through the lens of typical Wall Street investment strategies has been perpetually doomed to get it exactly wrong.

It's almost exactly the same. Speculation on bitcoin is no different than penny stocks, TSLA or even tulips (as Nephrology alluded to earlier).

It may go up more. It almost certainly will. But it's not the only thing that will, and since its value is driven entirely by speculation rather than any sort of underlying fundamental value, then don't forget zero is a valid place it stops.

BTC is gambling, not investing. Which is fine, but a lot of people are wearing rose colored glasses because this time it's different.

[RevolverRob]

Like the old saying goes, when's the best time to sell? When your cab (guess it'd be Uber now) driver tells you to buy.

I started the thread because I actually had a customer ask if he could pay for a 60k job with Litecoin. I told him we're not set up for that yet. I'm not opposed in principle. But I can't just sit on it and hope it appreciates (I need those funds for cash flow) and I can't pay my subs and vendors with LTC. And of course there's the risk that my 60k is worth 30k a week from now.

He can sell his Litecoin and pay you in cash, then. I'm not opposed to it in principle either, but I think you're right. Look the dollar is suffering against inflation right now. But at the end of the day a dollar is worth a dollar and it can be exchanged for goods and services. A BTC is worth whatever it's worth right now, but could be worth 0 in the future. A dollar will never be worth half of it's face currency, you just may not be able to buy what you need with that single dollar.

The concept that crypto is inflation proof is also fallacious. No currency is inflation proof - if cost of goods and services goes up the amount of currency needed to buy them goes up, period the end. Even if your currency is worth more than it was yesterday it still won't matter in the end.

Also, I'm not saying your customer was trying this but it seems a bunch of folks think crypto is a key to avoid taxation and transaction tracking. When the IRS audits you - and you can't explain how your house was paid for - expect a more thorough inquiry to follow. If you do explain you traded stocks or crypto for it, you're still going to have to pay tax...

[David S.]

Like the old saying goes, when's the best time to sell? When your cab (guess it'd be Uber now) driver tells you to buy.

I started the thread because I actually had a customer ask if he could pay for a 60k job with Litecoin. I told him we're not set up for that yet. I'm not opposed in principle. But I can't just sit on it and hope it appreciates (I need those funds for cash flow) and I can't pay my subs and vendors with LTC. And of course there's the risk that my 60k is worth 30k a week from now.

Is there any part of the contract that would require you to hold it in crypto for any period of time? If not, it's fairly simple to accept it and immediately sell it for dollars using an exchange like Coinbase. The funds would go directly into your Paypal or bank's ACH account.

The sell order may take a few days but you'll get the conversion rate at the time of transaction minus a processing fee. Presumably, it also creates a couple extra hoops that your accountant and tax person may have to deal with.

[Clusterfrack]

There is no way I would accept crypto as payment. Client can sell their crypto and pay me cash.

If I want to gamble on crypto, I’ll do it myself.

[npena84]

I as many was initially reluctant to dip into BTC. Then I saw this series interviewing Michael Saylor CEO of MicroStrategy and I completely changed my view. It's long and took my a week to finish. But the historical perspective he provides is hard to deny.

https://youtube.com/playlist?list=PL2jAZ0x9H0bQFY6wIbQfnrnIlqMcSHd6X

[Darth_Uno]

Oh, he just wrote me a check. No issues there. This is just the first time anyone offered to pay with crypto. I'd never considered it until now. I treat it purely as a gamble an investment, despite its ostensible use as a medium of exchange. Besides some extra steps converting to fiat and explaining it to my tax guy, there's really no other reason I couldn't have accepted it.

[MickAK]

Oh, he just wrote me a check. No issues there. This is just the first time anyone offered to pay with crypto. I'd never considered it until now. I treat it purely as a gamble an investment, despite its ostensible use as a medium of exchange. Besides some extra steps converting to fiat and explaining it to my tax guy, there's really no other reason I couldn't have accepted it.

Here's how a couple of people I know that accept crypto do it.

Back when paper credit was a new thing it was standard to have a discount rate for paper versus gold, which varied a lot depending on how various wars were going.

They charge a variable discount rate for crypto based on which coin, current market volatility, and most importantly how bad they want that job. So anywhere from 2% to 50%. It gives them another tool for sky bidding jobs when they're too busy without putting out outrageous USD bids and losing business later. They gain a lot of business just by word of mouth that they accept crypto.

So they've been bit a few times but overall it's been very profitable for them. One of them keeps a 'shady' list and won't accept crypto that gets used too often in illegal transactions.

[HCM]

78791

[Darth_Uno]

I still don't get it , but it's worth US dollars which I definitely understand. Doesn't matter what it's worth, or backed by. I only care if I can sell it to someone else for more than I paid.

[joshs]

Not realty. Neither can effectively function as currency, both have value based purely on speculation. Those two are better established perhaps but fundamentally no different

The fact that we’re talking about them on P-F is a sign that the top of the market probably isn’t too far off

In all seriousness, why don't you think some form of crypto, especially one that is setup like bitcoin, can function as currency?

I think the biggest current barrier is the fact that transactions don't instantly clear, so market volatility can affect a payout. I think there's a company in South America trying to build on top of block chain to instantly clear transactions.

Using cryptography for transactions rather than the current payment networks could create huge consumer surplus. The Treasury Department could do this with digital dollars and eliminate the existing transactions costs that we all currently deal with (usually around 3%). The downside to Treasury doing it is that it's still fiat currency, so our government can still make us all poorer by making more dollars to pay off US debt or engage in Keynesian velocity nonsense.

Bitcoin's proof of work model still seems like the best way to create a currency if our government isn't willing to engage in self-restraint by pegging our currency to some standard.

[Nephrology]

You know that guy that never thought 280 character messages would catch on . . .

Apple: oranges. Fundamentally crypto cannot function as a currency because a)transaction time and costs are far too high to make regular exchange of crypto feasible and 2) because it is not fiat backed by central bank nor something with intrinsic value (precious metals, gems, in theory stocks, commodities, etc). As a result, the $1 BTC that bought you a coffee in 2010 is now worth like 4 years of private school tuition. Even at present massive swings in crypto values mean that it is not a practical means of transaction. Its biggest benefit is anonymity which is useful for illegal transactions but little else. Thus 100% of the value is based on speculation, which makes it a speculative investment. Speculative investment are speculative. Invest accordingly.

E.g. https://screenrant.com/the-comicspeculator-bubble-explained/

[Caballoflaco]

Apple: oranges. Fundamentally crypto cannot function as a currency because a)transaction time and costs are far too high to make regular exchange of crypto feasible and 2) because it is not fiat backed by central bank nor something with intrinsic value (precious metals, gems, in theory stocks, commodities, etc). As a result, the $1 BTC that bought you a coffee in 2010 is now worth like 4 years of private school tuition. Even at present massive swings in crypto values mean that it is not a practical means of transaction. Its biggest benefit is anonymity which is useful for illegal transactions but little else. Thus 100% of the value is based on speculation, which makes it a speculative investment. Speculative investment are speculative. Invest accordingly.

E.g. https://screenrant.com/the-comicspeculator-bubble-explained/

Yet, while I haven’t looked into what all is being developed in the crypto world this podcast is worth a listen to see where developers are trying to take it.

https://palladiummag.com/2021/04/24/palladium-podcast-58-when-crypto-eats-the-world/

ETA: I think we’ll see a transition period in the next decade where secondary economies begin to develop around crypto currencies. I don’t know where that will leave fiat money, but I do think we’re in for some societal changes.

[Darth_Uno]

Yet, while I haven’t looked into what all is being developed in the crypto world this podcast is worth a listen to see where developers are trying to take it.

https://palladiummag.com/2021/04/24/palladium-podcast-58-when-crypto-eats-the-world/

ETA: I think we’ll see a transition period in the next decade where secondary economies begin to develop around crypto currencies. I don’t know where that will leave fiat money, but I do think we’re in for some societal changes.

Exactly. For years, unless you cared to trade chickens for other goods, the dollar was the only way to get what you wanted. Now you don't need a dollar; you can also pay with any available cryptocurrency. Apparently you can buy a 60k remodel job with Litecoin, anyway.

Of course crypto isn't backed with anything besides its perceived value relative to the dollar, which could be substantial...or nothing at all. To be frank, and I'd suspect most 'investors' fall into this category, I don't want $60,000 worth of Litecoin - I want enough Litecoin where I can cash it out for $60,000.

[Caballoflaco]

Do some reading on aave, there’s already a more advanced underground economy slowly emerging that is way more than just “I buy bitcoin and make money”.

https://www.kraken.com/en-us/learn/what-is-aave-lend


One of a number of emerging DeFi cryptocurrencies, Aave is a decentralized lending system that allows users to lend, borrow and earn interest on crypto assets, all without middlemen.

Running on the Ethereum blockchain, Aave instead is a system of smart contracts that enables these assets to be managed by a distributed network of computers running its software.

This means Aave users do not need to trust a particular institution or person to manage their funds. They need only trust that its code will execute as written.

At its core, the Aave software enables the creation of lending pools that enable users to lend or borrow 17 different cryptocurrencies including ETH, BAT and MANA.

Like other decentralized lending systems on Ethereum, Aave borrowers must post collateral before they can borrow. Further, they can only borrow up to the value of the collateral they post.

Borrowers receive funds in the form of a special token known as an aToken, which is pegged to the value of another asset. This token is then encoded so lenders receive interest on deposits

A borrower may post collateral in DAI, for example, and borrow in ETH. This allows a borrower to gain exposure to different cryptocurrencies without owning them outright.

Aave can also introduce additional features, such as instant loans, and other forms of issuing debt and credit that take advantage of the unique design properties of blockchains.

Also; did people here forget that El Salvadore recently adopted bit coin as a currency and you can now go to the store there and get some pupasas and a coke and they have to accept bitcoin?

[RevolverRob]

Do some reading on aave, there’s already a more advanced underground economy slowly emerging that is way more than just “I buy bitcoin and make money”.

https://www.kraken.com/en-us/learn/what-is-aave-lend



Also; did people here forget that El Salvadore recently adopted bit coin as a currency and you can now go to the store there and get some pupasas and a coke and they have to accept bitcoin?

Which fundamentally makes it no different than any digital form of fiat currency.

I think that's the thing folks haven't grasped on to. If you trade crypto for goods and services it's no different than using cash to do so. Except that you don't need to convert crypto like you would dollars to euros and that transactions are difficult to track.

The latter represents the double edged sword of crypto. The can't track transactions. You also have limited ability to track transactions. No banking institution worth a damn, is going to handle untraceable assets as a core component to their financial business. It's not in their favor. Until there is an ability to confirm crypto assets, transition them to some other fungible asset, instantly, it's value is theoretical, not realistic. And when you can do the latter...you can trace and track transactions.

Picking up what I'm putting down? For Crypto to survive long term, without jumping from one currency type to another every 18-24 months, there has to be the ability to bank with it.

Cryptocurrency transaction tracking is the future.

[Borderland]

Reeks of massive bubble behavior. Anticipate lots of pain and lost savings to tulip mania 2021.

Fundamentally zero value as actual currency, 100% value in speculative buying/selling. It's all fun and games til the music stops. If you think you can time the market, have at it. Recognize it is gambling and spend accordingly.

I used to bet the horses at Turf Paradise and then Long Acres after I moved to WA. I became a student and was quite good at it. I made a few bucks. I've always liked betting the odds. Then I realized that it wasn't a good investment of my time or my money, but it was sporting.

Crypto currency is long odds at this point in time. It's an underground economy. When it begins to be a problem for the federal reserve it's toast. It's already been hacked.

https://www.cnbc.com/2021/08/19/liquid-cryptocurrency-exchange-hack.html

True story. My bank account was hacked for 25K. Small bank with not a lot of security measures. Good thing for FDIC, I got it all back. I had to fill out a deposition basically attesting to the fact that I had no involvement with it. That tells me they had no idea how or who could do that and thought I was evolved somehow.

[joshs]

I used to bet the horses at Turf Paradise and then Long Acres after I moved to WA. I became a student and was quite good at it. I made a few bucks. I've always liked betting the odds. Then I realized that it wasn't a good investment of my time or my money, but it was sporting.

Crypto currency is long odds at this point in time. It's an underground economy. When it begins to be a problem for the federal reserve it's toast. It's already been hacked.

https://www.cnbc.com/2021/08/19/liquid-cryptocurrency-exchange-hack.html

True story. My bank account was hacked for 25K. Small bank with not a lot of security measures. Good thing for FDIC, I got it all back.

Holding large amounts of crypto on an exchange isn't a good idea. That's why hardware wallets exist.

[Borderland]

Holding large amounts of crypto on an exchange isn't a good idea. That's why hardware wallets exist.




Liquid said some of its digital currency wallets had been “compromised,” and that hackers were transferring the assets to four different wallets.

Anyway, not my bag.

[joshs]

Anyway, not my bag.

That article isn't talking about compromise of hardware wallets.

[Borderland]

That article isn't talking about compromise of hardware wallets.

OK. I'm not up on how one secures crypto currencies. I'm not even up on how one secures a bank account and neither is my bank. ;) They ate the 25K, or should I say fed ate it.

[0ddl0t]

I was watching the MLB NLCS game tonight and saw an ad for retirement funds dedicated to cryptocurrencies. That's gotta be a sign we're near the peak & running out of bigger fools...


What does bitcoin produce? Nothing but more global warming... When you speculate with gold, seeds, ammo, etc you at least have an asset that can be used for something else. Stocks in businesses that produce goods & services and (hopefully) profits are even better - the original "pro social" investing.

But currency? You're gambling that someone in the future will come along and pay more for your euros, yen, Zimbabwean dollars, or bitcoin. I don't see how anyone subscribing to the ethic of reciprocity (the Golden Rule) can "invest" this way in good conscience.

[Le Français]

OK. I'm not up on how one secures crypto currencies.

A hardware (or “cold”) wallet is a physical item that isn’t connected to a network.

[jh9]

https://www.bbc.com/news/technology-58678907

The CCP dropping the hammer on all crypto transactions feels like they're sitting on zero day exploit(s) for bitcoin-core (and probably other implementations). Now they're just waiting for a rival to get hip deep in it before executing. Hell, the US probably is too. Neither of them have their own geopolitical goals served by a store of value they don't control.

The problem with crypto is that it's difficult to get right. Not just the underlying math, but the code itself. This isn't a random piece of middleware; the people capable of meaningfully auditing the math and the C++ code are a tiny, tiny minority of the people who are capable of auditing the C++ code, who are in turn a tiny, tiny minority of the general public. And it's not like the bitcoin-core mining software has never had security updates (https://www.cvedetails.com/vulnerability-list.php?vendor_id=12094&product_id=0&version_id=0&page=1&hasexp=0&opdos=0&opec=0&opov=0&opcsrf=0&opgpriv=0&opsqli=0&opxss=0&opdirt=0&opmemc=0&ophttprs=0&opbyp=0&opfileinc=0&opginf=0&cvssscoremin=0&cvssscoremax=0&year=0&cweid=0&order=1&trc=35&sha=b9c7f64b5e0d3db0b219ec6e70e4c06740e4ad51). All implementations of the 'mining' software have had security vulnerabilities of varying severity.

Sooner or later, bitcoin is going to have its own heartbleed (https://en.wikipedia.org/wiki/Heartbleed) moment. State level actors finding an as-yet undiscovered flaw in not just the software but possibly the algorithm itself isn't a far-fetched idea. And when that happens, while everyone is trying to unfuck the network and wondering which particular version(s) of the mining software are spitting out tainted ledger entries, the bigger investors are going to bail. "But it's distributed, the network can recover" is going to sound meaningless when the value has tanked because all the investors have panicked and pulled out. If Musk can shave 15 points off its value with a tweet what do you think a Wall Street Journal article with "bitcoin hacked" in the title is going to do?

Fundamentally it comes down to literally every world power waiting to take bitcoin down because they don't control it and it represents a threat. And the people who want it to succeed are banking on the first draft of a paper written by a dude (or dudes) no one's ever even publicly identified. The only reason it hasn't been taken down by black hats or R U S S I A N H A C K E R S is because they benefit from it.

[David S.]

How Blockchain tech works. 101.


https://youtu.be/_160oMzblY8

[trailrunner]

I had to explain blockchain to my organization this week. As the name says, it's a chain of blocks that depend on the other blocks in a mathematical way. Somebody can't just add a block (i.e. ) in the chain because it won't be mathematically correct. This prevents an unauthorized person from altering the information (ledger), and it also makes the record-keeping public.

This method, along with the internet connecting everyone, is what makes digital currency possible. This allows anyone to invent, develop, market, and use any currency of their choosing, and go worldwide with it. Before the internet, someone could have done the same thing by printing paper notes and calling it their currency, and if enough people use it, then it becomes a viable way of doing business. The value of this currency is arbitrary and what the market is willing to value it at.

30 years ago, before the internet, if a bunch of people started hustling something called Bob's Currency (BC for short), I would have said no thanks. But wait - there is a limited number of BC because the serial numbers will be prime numbers, so you better get in now! And smart people that build planes and rockets like BC!! No thanks. There's always the chance it could catch on and become legitimate and stable, but in the meantime, I won't have FOMO. Remember, for every buyer there is a seller.

[TGS]

True story. My bank account was hacked for 25K. Small bank with not a lot of security measures. Good thing for FDIC, I got it all back. I had to fill out a deposition basically attesting to the fact that I had no involvement with it. That tells me they had no idea how or who could do that and thought I was evolved somehow.

Nah. That's just a standard check in the box.

[jh9]

Somebody can't just add a block (i.e. ) in the chain because it won't be mathematically correct. This prevents an unauthorized person from altering the information (ledger),

Hash collisions are a thing, though.

[Borderland]

Nah. That's just a standard check in the box.

No doubt. They never got back to me. Probably happens everyday.

[Borderland]

A hardware (or “cold”) wallet is a physical item that isn’t connected to a network.

How do you do an electronic transfer if it isn't connected to a network? Do you connect your wallet with another wallet? If you lose your wallet do you lose all of your "money" with it? I know nothing about how it works.

[Borderland]

How do you do an electronic transfer if it isn't connected to a network? Do you connect your wallet with another wallet? If you lose your wallet do you lose all of your "money" with it? I know nothing about how it works.

Never mind. I see how it works now.

[Darth_Uno]

What throws a lot of people off is that "wallet" is a bad analogy. Your digital currency is not stored in the physical wallet, like you'd have cash in a leather wallet. The wallet is basically a password manager that allows access to and from your assets (which again, are not stored offline). If your wallet is offline, nobody can use your keys to access your funds.

[Borderland]

What throws a lot of people off is that "wallet" is a bad analogy. Your digital currency is not stored in the physical wallet, like you'd have cash in a leather wallet. The wallet is basically a password manager that allows access to and from your assets (which again, are not stored offline). If your wallet is offline, nobody can use your keys to access your funds.

I'm just trying to understand the advantages of crypto currency so bare with me.

I don't think your money is physically in the bank either. My understanding is it's in play via loans. If everyone goes to the bank and wants cash for their electronic balance the cash won't be there.

Theoretically nobody can access my bank account without the proper information like passwords and device signatures. I'm constantly getting calls, alert texts and emails about transactions. I said in a previous post that my bank account was hacked for 25K. That was before I monitored my account daily and set up the alerts.

People can hack your bank account. Why would it not be possible to hack crypto currency? It's just a computer algorithm the same that banks use to safeguard your accounts. I know for a fact they can't lock up your accounts from hackers. They rely on you to monitor your transactions. Lots of holes there in their security. My guess is if you, as a bank IT person, gets it wrong, the bank loses millions. Then the fed steps in and makes everyone satisfied like it never happened.

[TGS]

I'm just trying to understand the advantages of crypto currency so bare with me.

I don't think your money is physically in the bank either. My understanding is it's in play via loans. If everyone goes to the bank and wants cash for their electronic balance the cash won't be there.

Theoretically nobody can access my bank account without the proper information like passwords and device signatures. I'm constantly getting calls, alert texts and emails about transactions. I said in a previous post that my bank account was hacked for 25K. That was before I monitored my account daily and set up the alerts.

People can hack your bank account. Why would it not be possible to hack crypto currency? It's just a computer algorithm the same that banks use to safeguard your accounts. I know for a fact they can't lock up your accounts from hackers. They rely on you to monitor your transactions. Lots of holes there in their security. My guess is if you, as a bank IT person, gets it wrong, the bank loses millions. then the fed steps in and makes everyone satisfied like it never happened.

It's possible. A "heist" worth ~$600 million USD in crypto was recently committed: https://www.bbc.com/news/business-58163917

The advantage is "fuck the man". Quite literally, and from what I can tell the only advantage besides the runaway value increase over the last 5 years which, as jh9 has pointed out is something that isn't unique to crypto...it was just one of an assortment of runaway investments throughout history, and from what I can tell the majority of crypto is pretty lame in returns compared to just dumping your money into an S&P500 ETF.

I think people are getting distracted by the runaway value thinking crypto is something it isn't, as if we're all going to adopt crypto and all of us will become rich, which obviously isn't the way things work. Early risk takers were rewarded...everyone else can get in line for a new form of financial slavery. Crypto allows anonymous transactions but IMO will not be any sort of world-changing liberation that some people are imagining when in fact they're just falling for some utopian dream. They think they're unchained from the constraints of society, whereas in reality they're just a cog in someone else's machine.

"Meet the new boss, same as the old boss" applies, IMO.

In addition, good luck dispersing any accumulated wealth of crypto to your loved ones upon an unexpected death....unless you like everyone on your beneficiary list keeping a copy of your key, which isn't likely to happen. Or, good luck if you lose your key....with your bank, you can reset your online password or if shit really hits the fan you can show up with your identity documents and prove you own the account to regain access. Have $60k worth of crypto that you were looking to use for a house remodel and lose your key? You're fucked. It's gone.

[Borderland]

It's possible. A "heist" worth ~$600 million USD in crypto was recently committed: https://www.bbc.com/news/business-58163917

The advantage is "fuck the man". Quite literally, and from what I can tell the only advantage besides the runaway value increase over the last 5 years which, as jh9 has pointed out is something that isn't unique to crypto...it was just one of an assortment of runaway investments throughout history, and from what I can tell the majority of crypto is pretty lame in returns compared to just dumping your money into an S&P500 ETF.

I think people are getting distracted by the runaway value thinking crypto is something it isn't, as if we're all going to adopt crypto and all of us will become rich, which obviously isn't the way things work. Early risk takers were rewarded...everyone else can get in line for a new form of financial slavery. Crypto allows anonymous transactions but IMO will not be any sort of world-changing liberation that some people are imagining when in fact they're just falling for some utopian dream. They think they're unchained from the constraints of society, whereas in reality they're just a cog in someone else's machine.

"Meet the new boss, same as the old boss" applies, IMO.

In addition, good luck dispersing any accumulated wealth of crypto to your loved ones upon an unexpected death....unless you like everyone on your beneficiary list keeping a copy of your key, which isn't likely to happen. Or, good luck if you lose your key....with your bank, you can reset your online password or if shit really hits the fan you can show up with your identity documents and prove you own the account to regain access. Have $60k worth of crypto that you were looking to use for a house remodel and lose your key? You're fucked. It's gone.

Some good points. My bank wasn't out the 25K. Deposits are insured. Is the fed going to cover a crypto lose through a hack? My guess is they're going to say if it isn't FDIC you're SOL.

[David S.]

... nevermind

[Darth_Uno]

... nevermind

That's how a lot of people feel about crypto right now. :eek:

[JCS]

I'm just trying to understand the advantages of crypto currency so bare with me.

I don't think your money is physically in the bank either. My understanding is it's in play via loans. If everyone goes to the bank and wants cash for their electronic balance the cash won't be there.

Theoretically nobody can access my bank account without the proper information like passwords and device signatures. I'm constantly getting calls, alert texts and emails about transactions. I said in a previous post that my bank account was hacked for 25K. That was before I monitored my account daily and set up the alerts.

People can hack your bank account. Why would it not be possible to hack crypto currency? It's just a computer algorithm the same that banks use to safeguard your accounts. I know for a fact they can't lock up your accounts from hackers. They rely on you to monitor your transactions. Lots of holes there in their security. My guess is if you, as a bank IT person, gets it wrong, the bank loses millions. Then the fed steps in and makes everyone satisfied like it never happened.

There is a saying in crypto, “not your keys not your crypto”. Meaning you and you alone should hold the keys to your crypto wallet. The keys are really an encrypted number and it’s commonly remembered by a pass phrase of 12-24 words. If you are serious about crypto it requires extreme responsibility. It also means that if you lose your access to it it is gone forever. It is basically mathematically impossible to randomly guess someone’s keys to their account. Smart people have calculated the odds and it’s a bigger number than I can fathom.

With crypto, people will often have a hardware wallet (think super secure flash drive for simple understanding). To send funds you must know someone’s keys.

There is no fed to back it. You lose it and it’s gone. But who would you rather trust with your money, the government or yourself? If the answer is the government and you don’t want to take 100% responsibility for the security of your assets then crypto is not for you.

Using 3rd parties like robinhood or Coinbase is allowing a third party to store your funds. Is basically an IOU that they will keep your crypto safe and if they get hacked or don’t want to give you access anymore you are screwed.

[JCS]

I’m also confused by it right now. On the one hand, the prices are lower than usual; on the other, the market is not stable at all. The economic situation is becoming worse day by day, and it seems not relevant to buy virtual currency. What do you think about cryptos now?

I feel better about it now than a 2 years ago. By it I mean Bitcoin. All the others are garbage imo.

Think of it like this. Would you rather own a currency that no more can ever be made or created, or a currency that the government can print at will?

There will never be more than 21 million Bitcoin. Our government printed something like 40% more dollars since Covid began. Putting your faith in fiat is putting your faith in the government that they will be good stewards of the US dollar.

[David S.]

.....

- You could hold it on the exchange (Coinbase, etc). You can also send or receive money with an exchange. This is the simplest, but least secure method. The downside is they hold your private keys, not you. Much like a bank, if they get hacked or if the government bangs on Coinbase's door looking for info, you loose your crypto and/or your privacy.

.....


Get your cryptocurrency off the exchanges. Just sayin'.

Self custody in a wallet is the way. And it's not that hard.

[JCS]

Get your cryptocurrency off the exchanges. Just sayin'.

Self custody in a wallet is the way. And it's not that hard.

Look no further than the FTX debacle. If people are using exchanges you don't own crypto. You own an IOU and you're putting your faith in the company that they actually own the crypto. They very likely do not and if they go under you're out of luck. FTX was a Ponzi and the dude basically bragged about it. Sadly, a lot of crypto is the same. If people want to do crypto you need to take responsibility over it, and get a hardware wallet and secure it yourself.

[JCS]

In addition, good luck dispersing any accumulated wealth of crypto to your loved ones upon an unexpected death....unless you like everyone on your beneficiary list keeping a copy of your key, which isn't likely to happen. Or, good luck if you lose your key....with your bank, you can reset your online password or if shit really hits the fan you can show up with your identity documents and prove you own the account to regain access. Have $60k worth of crypto that you were looking to use for a house remodel and lose your key? You're fucked. It's gone.

There are methods out there to safely and securely pass on crypto to your family. You can do it yourself or there are also companies that will do it with multi-sig wallets. It's complex to those outside crypto so I think having the companies is a good option because they can walk your family through it if they are crypto illiterate. But you're right, the average person is probably just going to be out of luck unless they share their keys and passwords which kind of defeats the whole purpose of self custody.

[Borderland]

FTX is a good example of how crypto currency can fail. The tech is probably sound but the people managing the bank did some shady deals. Billions lost.

https://www.ft.com/content/ac058ede-80cb-4aa6-8394-941443eec7e3




In the aftermath of the collapse of FTX, authorities should resist the urge to create a parallel legal and regulatory framework for the crypto industry. It is far better to do nothing, and just let crypto burn.

Personally, I like cash that banks are willing to exchange. I'm always suspicious of electronic transfers. OK boomer.

[0ddl0t]

People with gold certificates, as opposed to physical gold, take many of the same chances

[RevolverRob]

If you can not hold it physically in your hand - you don't own it.

NFTs, Crypto, Certificates for Precious Metals, stocks, bonds

I'm not saying don't buy/trade/invest in those things (I do). But recognize unless you can physically wrap your hands around it and it's acceptable for barter, trade, or debts - it isn't really your's. It's at best a note that may or may not guarantee you something in exchange for the note.

Just be real about it. Folks who thought (or still think) Crypto is the future are delusional. The limiting factor of all digital currencies is the ability to eventually convert them into some hard.

No hardness, no fun.

[BWT]

I’ve come to the conclusion that cryptocurrency is a pyramid scheme.

Get in early and then convince other people to get in after you to make you money.

I don’t see a value of transforming a currency from one medium to another medium.

Im not saying it shouldn’t exist, but I just didn’t see it as worth the value and effort.

That being said I could be a fool.

[Borderland]

People with gold certificates, as opposed to physical gold, take many of the same chances

Physical gold is the way to buy it. It's doing much better than Bitcoin. ;)

[JCS]

If you can not hold it physically in your hand - you don't own it.

NFTs, Crypto, Certificates for Precious Metals, stocks, bonds

I'm not saying don't buy/trade/invest in those things (I do). But recognize unless you can physically wrap your hands around it and it's acceptable for barter, trade, or debts - it isn't really your's. It's at best a note that may or may not guarantee you something in exchange for the note.

Just be real about it. Folks who thought (or still think) Crypto is the future are delusional. The limiting factor of all digital currencies is the ability to eventually convert them into some hard.

No hardness, no fun.

What do you mean by “hard”. Gold, silver, etc.?

[JCS]

I’ve come to the conclusion that cryptocurrency is a pyramid scheme.

Get in early and then convince other people to get in after you to make you money.

I don’t see a value of transforming a currency from one medium to another medium.

Im not saying it shouldn’t exist, but I just didn’t see it as worth the value and effort.

That being said I could be a fool.

The US dollar is inflationary.
Bitcoin is deflationary because no more can be made.

For example, let’s compare buying a car 5 years ago vs today.
It costs more US dollars today to buy a new car than it did 5 years ago.
It costs less Bitcoin today to buy a new car than it did 5 years ago.

[0ddl0t]

Ignoring all the other problems, having a limit of 1 bitcoin per 381 people doesn't seem useable on anything but a small scale.

[BWT]

The US dollar is inflationary.
Bitcoin is deflationary because no more can be made.

For example, let’s compare buying a car 5 years ago vs today.
It costs more US dollars today to buy a new car than it did 5 years ago.
It costs less Bitcoin today to buy a new car than it did 5 years ago.

Not exactly in my opinion.

For example, we won’t stop using the dollar in 5 years. But, if we stop valuing cryptocurrency or using it especially after organizations such as FTX go under or that market takes a hit. It is an alternative currency. I don’t disagree with you that it’s a limited supply. But I do believe as we find out how low and for how long we’ll be in the financial straights we’re headed into something such as cryptocurrency will have less appeal.

I mean we’ll find out. But the model literally has been get in early and then get others in (ETA:) to increase the values of the earlier members system and thus my parallel of the pyramid scheme.

ETA: I think what will really hurt cryptocurrency is if individuals suddenly feel they are part of an illegitimate enterprise and bail. I think this FTX event will be very influential.

[RevolverRob]

What do you mean by “hard”. Gold, silver, etc.?

Gold, Silver, Lead, Small Pistol Primers, raw steel and machining tools - the kinds of things you can make currency from, with, or use to acquire what you need.

In 99% of use cases I cannot walk into a Pawn Shop and trade Bitcoin for a handgun. But I can do that with gold or silver.

In the crypto case, I need to exchange my crypto for actual cash or some other currency and then use that to buy that handgun. Similarly with stocks, I sell the stocks for cash, and use the cash for other goods.

If the crypto isn't acceptable by a wide range of entities for goods and services it is a poor currency. In fact, owning crypto isn't much different than stocks or bonds, except it is most unregulated. Which won't be the case when the FTX dust is cleared (and never was going to be the case for forever).

[GJM]

I have tried multiple times to understand how crypto works, what it does that solves an unmet need, and how controls have been built in to avoid incompetence, fraud and assure transparency. Each time I have given up and decided it ain't for me.

[David S.]

Did you stop investing because of Enron? Did you stop buying homes because of Lehman Brothers and the rest of 2008?

FTX is just an example of people getting scammed in a different currency, no different than the countless scams in my lifetime that have happened in dollars. (It's certainly interesting how the DNC and Ukraine potentially fits into all this, but I suppose that's for another thread.)

Maybe it's a matter of who I'm listening to, but every. single. one. of. them. has said to keep your money off the exchanges. Like, this is baby step #3 of owning crypto. With just a minimal bit research, an average consumer is protected against an FTX type implosion.

[Borderland]

The US dollar is inflationary.
Bitcoin is deflationary because no more can be made.

For example, let’s compare buying a car 5 years ago vs today.
It costs more US dollars today to buy a new car than it did 5 years ago.
It costs less Bitcoin today to buy a new car than it did 5 years ago.

Will your local dealer take bitcoin for a new car? Just asking. Maybe some do, IDK. I haven't purchased one in 3 years. I wrote a check for the purchase price, including taxes and licensing, and they let me drive it away. I think somewhere in the sales pitch for additional warranty, BS about the family and dealer installed options they ran a check.

Nobody bounces a check for for 45K these days except maybe a casino with new employees. Keyboards in overdrive.

[MickAK]

I have tried multiple times to understand how crypto works, what it does that solves an unmet need, and how controls have been built in to avoid incompetence, fraud and assure transparency. Each time I have given up and decided it ain't for me.

I've had the same questions about the fine art market and the answers are probably just as long with the same very short answer being the real one.

[David S.]

Will your local dealer take bitcoin for a new car? Just asking. Maybe some do, IDK. I haven't purchased one in 3 years. I wrote a check for the purchase price, including taxes and licensing, and they let me drive it away. I think somewhere in the sales pitch for additional warranty, BS about the family and dealer installed options they ran a check.

Nobody bounces a check for for 45K these days except maybe a casino.

Some businesses do accept crypto, but for the most part, not yet. Then again, normies have only been aware of it for what, 7 years?

Maybe it never takes off, or maybe RevolverRob is wrong, and it does indeed take over the world.


Just be real about it. Folks who thought (or still think) Crypto is the future are delusional. The limiting factor of all digital currencies is the ability to eventually convert them into some hard.

Who really knows?

I'm not investing my life savings into crypto, and certainly not leveraging into it, but I'm putting some of my net wealth into it BTC. Just in case this 15 year thing turns out to be more than tulip mania.

[JCS]

Not exactly in my opinion.

For example, we won’t stop using the dollar in 5 years. But, if we stop valuing cryptocurrency or using it especially after organizations such as FTX go under or that market takes a hit. It is an alternative currency. I don’t disagree with you that it’s a limited supply. But I do believe as we find out how low and for how long we’ll be in the financial straights we’re headed into something such as cryptocurrency will have less appeal.

I mean we’ll find out. But the model literally has been get in early and then get others in (ETA:) to increase the values of the earlier members system and thus my parallel of the pyramid scheme.

ETA: I think what will really hurt cryptocurrency is if individuals suddenly feel they are part of an illegitimate enterprise and bail. I think this FTX event will be very influential.

I should clarify I"m a Bitcoin maximalist, so I agree that all the other ones are essentially pump and dump scams. I spent time and lost money trying to chase a quick dollar or big gain in all the garbage coins.

[JCS]

Will your local dealer take bitcoin for a new car? Just asking. Maybe some do, IDK. I haven't purchased one in 3 years. I wrote a check for the purchase price, including taxes and licensing, and they let me drive it away. I think somewhere in the sales pitch for additional warranty, BS about the family and dealer installed options they ran a check.

Nobody bounces a check for for 45K these days except maybe a casino with new employees. Keyboards in overdrive.

Where I live? No. USD only. But I can buy a cup of coffee. I also can't buy a car with gold, stocks, bonds or real estate. I don't view Bitcoin as strictly a currency. I value it as an asset. Although I could buy things with it and it's possible one day I could buy a car with it but that's not why I invest in it.

[Half Moon]

People with gold certificates, as opposed to physical gold, take many of the same chances

True enough. I spent a couple months as an IT consultant for a business that included precious metals. A few years later saw a newspaper article with the owner going to jail for operating a Ponzi scheme with the precious metal certificates. Explained certain oddities when I was asking scoping questions as part of the engagement.

...

The problem with crypto is there is no inherent value. You have a part of the solution to a valueless equation. Valuation can swing wildly because there is no basis of real value. Doesn't mean you can't make money if you get in and out at the right times but end of the day it doesn't even have the value of a tulip.

The deflationary nature of bitcoin is also a limit. Economically a slightly inflationary currency encourages putting money to work to gain a higher than inflation return. A deflationary currency encourages stagnation.

[JCS]

I have tried multiple times to understand how crypto works, what it does that solves an unmet need, and how controls have been built in to avoid incompetence, fraud and assure transparency. Each time I have given up and decided it ain't for me.

If you really are interested I recommend this audiobook (or paper if that's your thing). https://www.audible.com/pd/The-Bitcoin-Standard-Audiobook/B07D7ZRKLJ

It explains the history of money and the economic theory behind Bitcoin. There's no currency more fraud proof and transparent than Bitcoin. You could view every transaction that's ever occurred with Bitcoin. Proof of work and the blockchain is genius.

[GJM]

Did you stop investing because of Enron? Did you stop buying homes because of Lehman Brothers and the rest of 2008?

FTX is just an example of people getting scammed in a different currency, no different than the countless scams in my lifetime that have happened in dollars. (It's certainly interesting how the DNC and Ukraine potentially fits into all this, but I suppose that's for another thread.)

Maybe it's a matter of who I'm listening to, but every. single. one. of. them. has said to keep your money off the exchanges. Like, this is baby step #3 of owning crypto. With just a minimal bit research, an average consumer is protected against an FTX type implosion.

My number one investment rule is to stick to things I understand.


You could view every transaction that's ever occurred with Bitcoin. Proof of work and the blockchain is genius.

Pretty sure Sam Bankman-Fried said that, too.

[CleverNickname]

Ignoring all the other problems, having a limit of 1 bitcoin per 381 people doesn't seem useable on anything but a small scale.
Of all the issues with Bitcoin, this isn't one. Each bitcoin is divisible into 100 million satoshis.

[David S.]

My number one investment rule is to stick to things I understand.

Seems reasonable enough. :shrug:

[JCS]

My number one investment rule is to stick to things I understand.



Pretty sure Sam Bankman-Fried said that, too.

I think your number one rule is great. I wouldn't encourage someone to invest in Bitcoin until they understood it. I think the book I listed is a good starting point and if someone told me they wanted to invest in Bitcoin I would encourage them to read that book and study and research it for a dozen hours before investing anything serious into it. Even advocates for it must admit that there is volatility to it and to be in it for the long term you have to believe in the theory behind it.

[RevolverRob]

Of all the issues with Bitcoin, this isn't one. Each bitcoin is divisible into 100 million satoshis.

But isn't Bitcoin deflationary not inflationary?

If you divide each coin by up to 100,000,000 times - you're increasing the number of general units in circulation. Seems like...inflation to me. :D

[MickAK]

But isn't Bitcoin deflationary not inflationary?

If you divide each coin by up to 100,000,000 times - you're increasing the number of general units in circulation. Seems like...inflation to me. :D

No. If a dollar could buy you a car so you started paying the plumber in pennies it's not inflation. I can't tell if you're joking.

[GJM]

Buffet's take:

https://www.cnbc.com/2022/04/30/warren-buffett-gives-his-most-expansive-explanation-for-why-he-doesnt-believe-in-bitcoin.html

[GJM]

Here is a question, and I have no idea of the answer. If, since inception, you tally up all the money invested in crypto, all the outflows, and the real value of current crypto holdings, is crypto collectively in the red or black?

[0ddl0t]

If you included energy expended "mining" bitcoin I'd be pretty confident it is in the red

[Nephrology]

Reeks of massive bubble behavior. Anticipate lots of pain and lost savings to tulip mania 2021.

Fundamentally zero value as actual currency, 100% value in speculative buying/selling. It's all fun and games til the music stops. If you think you can time the market, have at it. Recognize it is gambling and spend accordingly.

This proved prescient

[Borderland]

Buffet's take:

https://www.cnbc.com/2022/04/30/warren-buffett-gives-his-most-expansive-explanation-for-why-he-doesnt-believe-in-bitcoin.html




probably rat poison squared.

[TheRoland]

I think your number one rule is great. I wouldn't encourage someone to invest in Bitcoin until they understood it. I think the book I listed is a good starting point and if someone told me they wanted to invest in Bitcoin I would encourage them to read that book and study and research it for a dozen hours before investing anything serious into it. Even advocates for it must admit that there is volatility to it and to be in it for the long term you have to believe in the theory behind it.

I skimmed this book years ago and do not recommend. This book has some serious limitations in that it sees Bitcoin as some outcome of historical economics rather than a software product. Pushing a maybe-not-totally-historical narrative of what money is instead of explaining what the blockchain is and how it works and what we've learned about using it so far. It was written in 2018 and we've come a long way in discovering Bitcoin's technical problems since then. We've had hard forks, tried to deal with block size issues unsuccessfully, had runaway gas fees, largely fallen out of love with proof-of-work...

Crypto is a software product and when I see economics-theory based books or worse, history books recommended about it, I really get concerned. I would recommend wikipedia over this.

I do not remember quite enough to summarize the book's thesis fairly but we've learned a lot (of technical, software stuff!) in 4 years that will likely prevent bitcoin from being used as a general currency, which I think was fairly integral to what this book wanted.

[Borderland]

Some comparisons to the S&P 500.




KEY FINDINGS:

$1,000 invested in cryptocurrency grew to $27,000 over five years. From 2016 to 2021, that's a compound annual growth rate of 94%.

The S&P 500 outperformed the cryptocurrency index in 2021. From 2013 to 2022, cryptocurrency was four times more volatile than the S&P 500 over the same period and 26 times more volatile than bonds.

After an initial period of lower correlation between assets, cryptocurrency and stocks have become more correlated through 2021 into the start of 2022, suggesting that cryptocurrencies may not be viable as a store of value.

Incorporating cryptocurrency as a small percentage (3%) into a moderately aggressive long-term portfolio of 70/30 stocks/bonds from 2017 to 2021 would have led to 42% higher investment returns. This comes at the price of 18% higher portfolio volatility.

In other words, extremely volatile.

[willie]

[QUOTE=RevolverRob;1418583]But isn't Bitcoin deflationary not inflationary?

If you divide each coin by up to 100,000,000 times - you're increasing the number of general units in circulation. Seems like...inflation to me. :D[/QUOTE

At the jail, a male guard told another male guard that he would blow a dude for $1000,000. The trusty, charged with forgery, asked the speaker if he would take a check. Crypto money reminds me of this.

[JCS]

I do not remember quite enough to summarize the book's thesis fairly but we've learned a lot (of technical, software stuff!) in 4 years that will likely prevent bitcoin from being used as a general currency, which I think was fairly integral to what this book wanted.

Could you expand or link to something explaining what you mean by this? Are you referring to like how long it takes transactions to be confirmed on chain?

[TheRoland]

Could you expand or link to something explaining what you mean by this? Are you referring to like how long it takes transactions to be confirmed on chain?

That's probably a symptom of technical issues I don't fully understand re: block size and consensus, but yeah, transaction time in the hours is absolutely lethal when the price of bitcoin can change so much while the transaction is still floating (and might not actually be confirmed).

The other major issues are probably the volatility of gas (the crypto kind). The current $2.00 per transaction isn't killer but that's been 10x that before. If adoption was anywhere near the global banking system, that'd be back at 10x presumably. The power requirement argument is sort-of silly at the moment, but stop being silly if you imagine scaling up from a million enthusiasts to a global banking system. EDIT: Although, really, the current $2.00 is pretty terrible if you're buying something cheap like a box of ammo or a tank of gas.

I understand the hard limit of total bitcoin is an issue, too, but I'm not an economist so I could take or leave that argument.


None of this implies there's no point to crypto, but that book was all about that bitcoin was real money and I'm skeptical.

[GJM]

Some comparisons to the S&P 500.





In other words, extremely volatile.

Can you provide a source for the info you posted on crypto value over time?

[GJM]

I found this for Bitcoin from 2014 to today.

97363

[MickAK]

Everyone that has ever had to transfer a large sum of money to someone has an intrinsic understanding of the value of cryptocurrency and Blockchain ledgers, even if they don't know it yet.

I remember when Bitcoin crashed from ~$1600 and people said the same things, so I don't really take the current smugness that seriously.

Cryptocurrency was one of the brief periods where the wingnuts were able to out earn the pros, which is why so many people are attracted to it. That period is over, obviously. That has nothing to do with the underlying tech and utility.

[TheRoland]

Everyone that has ever had to transfer a large sum of money to someone has an intrinsic understanding of the value of cryptocurrency and Blockchain ledgers, even if they don't know it yet.
.

What do you mean by this?

[DMF13]

Buffet's take:

https://www.cnbc.com/2022/04/30/warren-buffett-gives-his-most-expansive-explanation-for-why-he-doesnt-believe-in-bitcoin.htmlA lot of people dismiss Buffett due to his age, and assume as an old man he struggles to understand the latest tech. They do so at their own peril.

I'll add that it was my understanding that one of the claimed advantages of cryptocurrency was the separation from government control of the currency. Looks like the FTX debacle shows that isn't true:
https://www.msn.com/en-us/money/companies/bahamas-regulators-confirm-theyre-holding-some-of-ftxs-assets/ar-AA14gGpp

[Borderland]

Can you provide a source for the info you posted on crypto value over time?



https://www.moneygeek.com/investing/crypto/cryptocurrency-or-stocks/

[Borderland]

A lot of people dismiss Buffett due to his age, and assume as an old man he struggles to understand the latest tech. They do so at their own peril.

I'll add that it was my understanding that one of the claimed advantages of cryptocurrency was the separation from government control of the currency. Looks like the FTX debacle shows that isn't true:
https://www.msn.com/en-us/money/companies/bahamas-regulators-confirm-theyre-holding-some-of-ftxs-assets/ar-AA14gGpp

I'll go with a savvy investor, which Buffet seems to be, any day of the week. Most financial investors would love to have his record with investments. So yeah, he knows the financial terrain and the places to capitalize on investments. You don't get to be #3 as the guy with the most money on Forbes by making bad moves.

I'll just question the regulation. Fools rush in.

https://www.npr.org/2022/11/18/1137492483/ftx-investors-worry-they-lost-everything-and-wonder-if-theres-anything-they-can-

Here's a good one.

https://youtu.be/hLKa24D1KUk

[Borderland]

Everyone that has ever had to transfer a large sum of money to someone has an intrinsic understanding of the value of cryptocurrency and Blockchain ledgers, even if they don't know it yet.

I remember when Bitcoin crashed from ~$1600 and people said the same things, so I don't really take the current smugness that seriously.

Cryptocurrency was one of the brief periods where the wingnuts were able to out earn the pros, which is why so many people are attracted to it. That period is over, obviously. That has nothing to do with the underlying tech and utility.

Not true. I know nothing about Crypto and Block Chain. I've done 20k deals with 100 dollar bills as payment with a revolver in my back pocket. No, it wasn't a drug deal. Some people still use cash.

WTF is wrong with people these days. Try cash and know it's your word and a little trust.

Banks still take cash the last time I checked.

[MickAK]

with a revolver in my back pocket.

Neat

[Borderland]

Neat

You don't own a carry ?

[MickAK]

What do you mean by this?

The infrastructure with which we verify and transfer value is inefficient and outdated. It's too big of an industry to remain inefficient.

It's going to change.

[GJM]

https://www.moneygeek.com/investing/crypto/cryptocurrency-or-stocks/

Thanks for that. Looking at their return data, it goes thru 2021. My guess is if the numbers went through today, they would look a lot different!

[Borderland]

Thanks for that. Looking at their return data, it goes thru 2021. My guess is if the numbers went through today, they would look a lot different!

I think it's moderated some. People are moving away because of the volatility and loses.

[JCS]

That's probably a symptom of technical issues I don't fully understand re: block size and consensus, but yeah, transaction time in the hours is absolutely lethal when the price of bitcoin can change so much while the transaction is still floating (and might not actually be confirmed).

The other major issues are probably the volatility of gas (the crypto kind). The current $2.00 per transaction isn't killer but that's been 10x that before. If adoption was anywhere near the global banking system, that'd be back at 10x presumably. The power requirement argument is sort-of silly at the moment, but stop being silly if you imagine scaling up from a million enthusiasts to a global banking system. EDIT: Although, really, the current $2.00 is pretty terrible if you're buying something cheap like a box of ammo or a tank of gas.

I understand the hard limit of total bitcoin is an issue, too, but I'm not an economist so I could take or leave that argument.


None of this implies there's no point to crypto, but that book was all about that bitcoin was real money and I'm skeptical.

I think the transaction time is an issue. I also think the solution is tech on the 2nd layer of Bitcoin. There’s some pretty cool stuff people are coming up with. If Bitcoin is to be adopted globally it still has a ways to go because it’s not easy for people to understand or store right now. But it’s only been around 12 years.

[TheRoland]

The infrastructure with which we verify and transfer value is inefficient and outdated. It's too big of an industry to remain inefficient.

It's going to change.

I don't know enough about the banking system to evaluate this, but the idea that blockchain is an efficient technology is crazy. I do not know how wire transfers work on the backend, so you may be correct, but yikes. Doing a wire transfer or an ACH, as an end user, is a lot easier and usually cheaper than sending Bitcoin or Eth or whatever.


I think the transaction time is an issue. I also think the solution is tech on the 2nd layer of Bitcoin. There’s some pretty cool stuff people are coming up with. If Bitcoin is to be adopted globally it still has a ways to go because it’s not easy for people to understand or store right now. But it’s only been around 12 years.

I have to admit I do not know a lot about any of the tech built on top of bitcoin. I'm sure it's not unsolvable but my understanding is it's really hard to do vs. building on a more recent chain. Which is why all the good scams are on Eth these days. :p

[GJM]

https://www.wsj.com/articles/how-caroline-ellison-found-herself-at-the-center-of-the-ftx-crypto-collapse-11668899604


https://www.wsj.com/articles/crypto-bank-silvergate-battles-ftx-contagion-fears-11668910608

[GJM]

https://www.politico.com/news/2022/11/20/washington-watchdogs-crypto-ftx-00069329

[David S.]

Twitter: CBP officers discovered $33K in unreported currency possessed by an Egypt-bound traveler at Washington Dulles International Airport during a baggage examination on November 8. The traveler verbally reported that he had $20K. (https://twitter.com/CBP/status/1594103324907040768?s=20&t=kDWusWFAoxi1EAwFIEn6uA)

[Yung]

Look no further than the FTX debacle.
It looks like back in 2019 some of the business and investment posters on 4chan and reddit knew things were amiss.

[JCS]

Twitter: CBP officers discovered $33K in unreported currency possessed by an Egypt-bound traveler at Washington Dulles International Airport during a baggage examination on November 8. The traveler verbally reported that he had $20K. (https://twitter.com/CBP/status/1594103324907040768?s=20&t=kDWusWFAoxi1EAwFIEn6uA)

Just another perk of Bitcoin. Govt. can’t touch it and I can take it all over the world and no one ever will know.

[JCS]

It looks like back in 2019 some of the business and investment posters on 4chan and reddit knew things were amiss.

He basically bragged about having a Ponzi scheme in an interview a couple months ago detailed here: https://finbold.com/ftx-founder-accidentally-described-ponzi-scheme-months-before-crash/

[David S.]

97408

[Darth_Uno]

The consensus here seems to be a good bit of distrust towards BTC or any crypto's long term viability. Whether that's so or not, if you were ever thinking putting a small part of your investments into crypto now would be a good time. I would personally hold them in a wallet, although there are ETF's that have crypto exposure to varying degrees of methods and risk. It's a way to get in on the potential gains without having to ever buy the crypto itself.

But if you think there might be something to Bitcoin after all, a small allocation wouldn't be completely silly right now. Currently I'd say it falls right on the razor edge of investing and speculation.

[the Schwartz]

The infrastructure with which we verify and transfer value is inefficient and outdated. It's too big of an industry to remain inefficient.

It's going to change.

I can transfer the US Dollar electronically very efficiently and have done so for years. Why it is better done with an instrument (crypto) that is not backed by a hard asset or the US government has yet to be proven especially in light of the latest hijinks with FTX.

Crypto is great if you're into extremely high risk vaporware that might give you something back if you're lucky enough to speculate correctly that day. Or not.

[Borderland]

Here's a good article from Forbes about crypto from a week ago.

https://www.forbes.com/sites/ninabambysheva/2022/11/14/the-looming-62-billion-crypto-contagion/?sh=3c19e7a61c39

I can't paste it here but they've done the research on 13 companies in the last year. The loses range anywhere from 16% to 97%. Average is around 64%. None of them had any gains.


At the peak in 2021 FTT had a market value of $9.6 billion, but unlike a common stock, which represents legal ownership in the assets of a corporation, FTT does not represent any equity ownership in the FTX company. If FTT had any intrinsic value, it was in the form of discounts that FTX customers using these tokens could get trading on the exchange–as much as 60% for active traders. You can think of these exchange tokens as being akin to loyalty or reward points you might get as a frequent customer of Starbucks or the UnitedMiles by flying on that airline. They have value, but it's unlikely that a bank would allow you to use them as collateral if you wanted to purchase a home. Forbes

[RoyGBiv]

I can transfer the US Dollar electronically very efficiently and have done so for years. Why it is better done with an instrument (crypto) that is not backed by a hard asset or the US government has yet to be proven especially in light of the latest hijinks with FTX.

Crypto is great if you're into extremely high risk vaporware that might give you something back if you're lucky enough to speculate correctly that day. Or not.

The ability to move funds without government supervision appeals to me if for no other reason than "none of your business what i do with my money after my taxes are paid"... In the gig economy, I certainly understand why Governments want to monopolize digital currency, but for me, privacy is a factor. Although, I assume it's not impossible to trace crypto if the user isn't paying attention to their personal privacy.

I had to loan my kid $20 to pay for a cash-only admission to some event last weekend. They paid me back via Zelle. Easier than an ATM and more convenient than carrying cash. Kids these days are cashless... Me? I pay for my sin products (ATF) in cash.

[GJM]

The ability to move funds without government supervision appeals to me if for no other reason than "none of your business what i do with my money after my taxes are paid"... In the gig economy, I certainly understand why Governments want to monopolize digital currency, but for me, privacy is a factor. Although, I assume it's not impossible to trace crypto if the user isn't paying attention to their personal privacy.

I had to loan my kid $20 to pay for a cash-only admission to some event last weekend. They paid me back via Zelle. Easier than an ATM and more convenient than carrying cash. Kids these days are cashless... Me? I pay for my sin products (ATF) in cash.

The flip side of being able to transfer without government supervision is exactly what happened when you trust a new company without government supervision!

Question for those with crypto holdings -- where do you keep these crypto holdings and what assurances do you have the crypto will be there when you want to access it?

[the Schwartz]

The ability to move funds without government supervision appeals to me if for no other reason than "none of your business what i do with my money after my taxes are paid"... In the gig economy, I certainly understand why Governments want to monopolize digital currency, but for me, privacy is a factor. Although, I assume it's not impossible to trace crypto if the user isn't paying attention to their personal privacy.

I'm willing to bet that our government is capable of tracing transacted crypto if the need arises. I'm certainly not important enough, nor do I have anything that I need to hide, to rise to that level, so the rather slim benefit of ''opacity'' is far outweighed by the risks that accompany the use of crypto as an investment or as currency. The ''juice'' just ain't worth the ''squeeze'', IMHO.



I had to loan my kid $20 to pay for a cash-only admission to some event last weekend. They paid me back via Zelle. Easier than an ATM and more convenient than carrying cash. Kids these days are cashless... Me? I pay for my sin products (ATF) in cash.

As I stated earlier, I'm fine with the electronic transfer of funds by legitimate service providers. It's the ready potential of crypto to turn into vaporware that keeps me from considering it as a serious option for anything that I want to do.

[Borderland]

Cash isn't easy to trace. We have contractors here that only deal in cash. They don't even like to run checks through their bank. Some don't even use a bank. I recently paid a contractor in cash because he didn't have a bank account in order to cash a check. I don't have a problem with that because it isn't my job to keep track of his business transactions using my bank account. Cash, or Federal Reserve Notes is legal tender for all debts, public and private.

I think many people these days think a person is doing something illegal by using cash. I gave a Costco checker some cash the other day because my bank card didn't work. She gave me a dirty look.

Personally I still like the idea of cash and keep some in my safe. When the EMP bomb goes off I'll have a way to buy some food and fuel. OK boomer.

[MickAK]

I can transfer the US Dollar electronically very efficiently and have done so for years. Why it is better done with an instrument (crypto) that is not backed by a hard asset or the US government has yet to be proven especially in light of the latest hijinks with FTX.

Crypto is great if you're into extremely high risk vaporware that might give you something back if you're lucky enough to speculate correctly that day. Or not.

As I stated earlier I have zero dollars and zero cents in crypto. That isn't going to change for a long time.

Not understanding the underlying utility is going to be a weakness going forward. It's going to be a part of the world, just not something you can make money off of if you're not a pro, like Forex.

[Darth_Uno]

The flip side of being able to transfer without government supervision is exactly what happened when you trust a new company without government supervision!

Question for those with crypto holdings -- where do you keep these crypto holdings and what assurances do you have the crypto will be there when you want to access it?

I have Coinbase wallet. That is my crypto, in my wallet. No matter what happens, I HAVE POSSESSION OF THAT CRYPTO. Coinbase can’t say sorry, we don’t have it. Keeping in mind that ownership and possession are two different things. If I bought on regular Coinbase (not via the wallet), Coinbase basically says “We’ll hold onto this for you.” Much like a bank holding your cash.

I’ll just tell you guys, last year I put 10k into various cryptos and by the end of the year it was worth almost 40k. I sold everything except my initial 10k. Which is now worth about 3k, but so be it. No point selling now. Anyway, you can’t directly sell on the wallet - you can only exchange for other crypto. So you have to move your coins back into “regular” Coinbase (or any other exchange), sell it for cash, then withdraw your cash. It’s not as hard as it sounds. Other exchanges may do it differently.

[TheRoland]

The ability to move funds without government supervision appeals to me if for no other reason than "none of your business what i do with my money after my taxes are paid"... In the gig economy, I certainly understand why Governments want to monopolize digital currency, but for me, privacy is a factor. Although, I assume it's not impossible to trace crypto if the user isn't paying attention to their personal privacy.


I'm not disagreeing with what you said, but to clarify for anyone who knows less: Crypto is incredibly traceable. The entire things works by making the ledgers public. You can go to any number of sites to very quickly search every bitcoin/eth/whatever transaction ever made.

It only gets hard because:

not a lot of people understand what they're looking at yet. and
There's a lot of stuff to look through and
"Accounts" are sort-of anonymous until you do something with them that identifies who own them.


You're totally right that the supervisory aspects are not well developed and Point 3 can be really big. But literally everyone can see what you did with your money if they know who you are.

EDIT: deleted a reply portion that was a misunderstand on my part.

[RoyGBiv]

The flip side of being able to transfer without government supervision is exactly what happened when you trust a new company without government supervision!

Question for those with crypto holdings -- where do you keep these crypto holdings and what assurances do you have the crypto will be there when you want to access it?

I've used a company called Veem that uses the crypto markets to "wire" funds internationally and avoid the bank fees on both sides. Some of my suppliers liked to add $50 or so to my invoices to recover their inbound wire fee. I was able to force them to Veem or eliminate the invoice charges. 50 bucks is more of an annoyance really. I'm happy to pay my side bank and you pay yours. Want me to pay yours? Veem.com

I'm definitely not a crypto investor (I have a few dollars in a coinbase wallet). But, I do like some of the things being done with it.

[CleverNickname]

Question for those with crypto holdings -- where do you keep these crypto holdings and what assurances do you have the crypto will be there when you want to access it?
My coins are several addresses I generated. They're not even loaded into a wallet right now because when I got them I didn't have any plans to do anything with the coins other than hodling, and I still don't. I have the keys backed up separately in encrypted form in several places; when I do want to do something I can import the addresses into a wallet very easily.

[Borderland]

I have Coinbase wallet. That is my crypto, in my wallet. No matter what happens, I HAVE POSSESSION OF THAT CRYPTO. Coinbase can’t say sorry, we don’t have it. Keeping in mind that ownership and possession are two different things. If I bought on regular Coinbase (not via the wallet), Coinbase basically says “We’ll hold onto this for you.” Much like a bank holding your cash.

I’ll just tell you guys, last year I put 10k into various cryptos and by the end of the year it was worth almost 40k. I sold everything except my initial 10k. Which is now worth about 3k, but so be it. No point selling now. Anyway, you can’t directly sell on the wallet - you can only exchange for other crypto. So you have to move your coins back into “regular” Coinbase (or any other exchange), sell it for cash, then withdraw your cash. It’s not as hard as it sounds. Other exchanges may do it differently.

As you pointed out you will always have possession of it but if the value goes to zero, you basically have possession of nothing of value.

I'll admit I don't understand how crypto is exchanged, but doesn't it matter what the market says it's worth? Isn't it like the USD in that on any given day it's value is worth what you happen to be buying. If I want to buy something with Bitcoin doesn't the price of that item fluctuate day to day because of the market price of Bitcoin? Two weeks ago I could buy a gallon of gas for 4.50 USD. Yesterday I could buy it for 3.75 USD.

If I paid 1 USD for a Bitcoin and yesterday the exchange price was 0.47 USD, didn't I just screw myself by holding Bitcoin, using it as an exchange medium?

[RoyGBiv]

As you pointed out you will always have possession of it but if the value goes to zero, you basically have possession of nothing of value.

I'll admit I don't understand how crypto is exchanged, but doesn't it matter what the market says it's worth? Isn't it like the USD in that on any given day it's value is worth what you happen to be buying. If I want to buy something with Bitcoin doesn't the price of that item fluctuate day to day because of the market price of Bitcoin? Two weeks ago I could buy a gallon of gas for 4.50 USD. Yesterday I could buy it for 3.75 USD.

If I paid 1 USD for a Bitcoin and yesterday the exchange price was 0.47 USD didn't I just screw myself by holding Bitcoin, using it as an exchange medium?

Yes. Holding bitcoin is currency speculation.
Flip side is if you bought BTC at 10k and sold at 60k a few weeks ago, you were a genius.

[Darth_Uno]

As you pointed out you will always have possession of it but if the value goes to zero, you basically have possession of nothing of value.



If it goes to zero, it probably doesn't really matter who has possession at that point. If it is worth something, possession and access can matter a great deal. https://en.wikipedia.org/wiki/Mt._Gox

[MickAK]

Yes. Holding bitcoin is currency speculation.
Flip side is if you bought BTC at 10k and sold at 60k a few weeks ago, you were a genius.

Until it goes to 120k and you're a dumbass again.

[CleverNickname]

Yes. Holding bitcoin is currency speculation.
Flip side is if you bought BTC at 10k and sold at 60k a few weeks ago, you were a genius.
Ask me about selling a G34 and a Rem 700 in 2017 for ~5 BTC and then immediately cashing out the BTC. As far as bad financial decisions go it wasn't all that bad since I didn't actually lose any money, but I sure missed on the upside.

[the Schwartz]

Cash isn't easy to trace. We have contractors here that only deal in cash. They don't even like to run checks through their bank. Some don't even use a bank. I recently paid a contractor in cash because he didn't have a bank account in order to cash a check. I don't have a problem with that because it isn't my job to keep track of his business transactions using my bank account. Cash, or Federal Reserve Notes is legal tender for all debts, public and private.

I think many people these days think a person is doing something illegal by using cash. I gave a Costco checker some cash the other day because my bank card didn't work. She gave me a dirty look.

Personally I still like the idea of cash and keep some in my safe. When the EMP bomb goes off I'll have a way to buy some food and fuel. OK boomer.


If an EMP weapon is used, your cash won't matter much, if at all. Count on a barter/labor exchange economy at that point because things will be that bad if the general public's behavior during relatively minor disruptions (e.g.; COVID) is any indicator of what we can expect to see during severe disruptions like an EMP attack.

[Borderland]

Yes. Holding bitcoin is currency speculation.
Flip side is if you bought BTC at 10k and sold at 60k a few weeks ago, you were a genius.

Not much difference than the futures market except a lot more volatile. Got it.

[JCS]

The flip side of being able to transfer without government supervision is exactly what happened when you trust a new company without government supervision!

Question for those with crypto holdings -- where do you keep these crypto holdings and what assurances do you have the crypto will be there when you want to access it?

Self-custody. I purchase BTC and then transfer to a cold storage wallet. It’s impossible for it to go anywhere once it’s on my wallet. I am the only person that can ever access it or transfer it. But self custody requires responsibility. There is no third party or bank that has access to it. It’s 100% on me. This is the part about crypto that makes people uncomfortable.

[Borderland]

I think I'll wait until the dust settles. I'm heavily invested in the stock market but I understand that. The risk is rated by smarter people than I and I depend on that to invest. I also understand how the value is based and the things that affect the market. With crypto it appears the value is in the fact that it isn't connected to any bank or national currency. I can see some benefit in that but the USD is a pretty stable currency. Now if I lived in Ubekybekystan, I might want some Bitcoin for no other reason than if the banks fail I might want to buy a plane ticket the hell out of there.

[JCS]

The ability to move funds without government supervision appeals to me if for no other reason than "none of your business what i do with my money after my taxes are paid"... In the gig economy, I certainly understand why Governments want to monopolize digital currency, but for me, privacy is a factor. Although, I assume it's not impossible to trace crypto if the user isn't paying attention to their personal privacy.

I had to loan my kid $20 to pay for a cash-only admission to some event last weekend. They paid me back via Zelle. Easier than an ATM and more convenient than carrying cash. Kids these days are cashless... Me? I pay for my sin products (ATF) in cash.

What really drove me into crypto was learning how little access I really have to my money. Well that and the government rapidly devaluing my money by printing more at will. Look at what happened in Canada with the truckers protest. They were freezing peoples bank accounts because of their involvement.
Want to make a large transfer from your bank? They ask all sorts of questions and ultimately can tell you no. You give your money to a bank and they now have control of it.

[GJM]

Interesting take:

https://www.cnbc.com/video/2022/11/18/dont-regulate-crypto-allow-it-to-implode-says-brandeis-professor-stephen-cecchetti.html

[OldRunner/CSAT Neighbor]

Interesting take:

https://www.cnbc.com/video/2022/11/18/dont-regulate-crypto-allow-it-to-implode-says-brandeis-professor-stephen-cecchetti.html

Caught it live, dude had some points IMO.

[Bart Carter]

Bitcoin was about 70K and months later about 16K. That's all I need to know about the strongest cryptocurrency in the market.

[the Schwartz]

Bitcoin was about 70K and months later about 16K. That's all I need to know about the strongest cryptocurrency in the market.

Yep. Crypto is more volatile than the NYSE and offers nothing that a well-balanced mix of equities and bonds doesn't. Unless one is really great at market timing, Crypto and Vegas are about the same in terms of risk with Vegas having better entertainment in its favor.

[JCS]

Bitcoin was about 70K and months later about 16K. That's all I need to know about the strongest cryptocurrency in the market.

People who are serious about BTC don’t view it through the lens of months. It’s a long term asset. If I look at my Roth over the past year it’s very depressing also. But when I zoom out to 3-4 years it’s encouraging. BTC is the same.

Many people in the space are advocates of DCA. Buying small amount daily or weekly so you’re not chasing the highs and lows. For example if I bought $25 a week the past three years this is what I would have.
97453

BTC is not for people that need to check it weekly or monthly. You have to believe in its long term value. So I get why people are turned off to it. I would only advocate for people buying if they believe in its long term value. If not then that’s ok. They’ll just get burned by it.

[GJM]

https://www.wsj.com/articles/treasury-warns-crypto-industry-of-money-laundering-risks-in-mixers-11669066067?page=1

Snippet:

The cryptocurrency industry must follow the U.S. Treasury Department’s anti-money-laundering and sanctions regulations to prevent bad actors from abusing platforms known as “mixers” to launder illicit funds, a senior official said.

Mixers, which enable users to exchange cryptocurrencies with relative anonymity, can be a way for illicit actors to obfuscate the ownership and movement of funds while making it harder for law enforcement to have visibility into the transfers, Elizabeth Rosenberg, the Treasury assistant secretary for terrorist financing and financial crimes, said in a speech Friday.

“The challenge is that while these services often operate as money transmitters and thus have regulatory reporting obligations, they may deliberately operate in a noncompliant manner to make it more difficult for regulators and law enforcement to trace illicit funds,” she said in the speech delivered at the Crypto Council for Innovation, a Washington-based trade association that lobbies on behalf of the crypto industry.

[David S.]

If an EMP weapon is used....

Isn't an EMP a localized weapon? Unless it takes out every. single. Bitcoin node in the entire world, then Bitcoin continues to work.

You just have to replace your fried device and sign back in. That would be inconvenient. It's not the end of Bitcoin.

[Maple Syrup Actual]

I'm crypto agnostic; I mostly agree with Warren Buffett (arguing with him seems pointless generally; by any objective measure of success he's thousands to millions of times better with money than I am) but I do think that Bitcoin does one thing, which is give big stakeholders a feeling that there is somewhere untouchable for their money to go.

Up until very recently I think this was beginning to develop "mainstream" appeal, to the extent that people wealthy enough to use BC as a sort of specialty hedge can be considered to have a mainstream segment, precisely because of Sam Bankman-Fried's connections to the Democratic party. I suspect money was beginning to flow in from a different user base as FTX was seen as a legitimate and "friendly" institution for elite money.

Early days but I think the collapse of FTX and revelations of the scam being run are going to scare off money at a higher level than Mt Gox, say. Mt Gox burned the weird nerds, but FTX probably burned big time Democratic donors. I haven't looked into it, this is just a guess...but I bet if you looked at lists of the top 100 D donors, and were able to connect those names to BC holdings, I SUSPECT that there would have been a ton of them with real money at FTX, just because of who SBF's family are and how he had been treated in some media up until a couple of weeks ago.

Anyway I am not in crypto because I don't trust that the appeal of the "placing funds beyond the reach of government" function will either A) prove to be true in the long run, or B) ultimately outweigh the volatility.

Whoever made the point early in the thread that assessing any given asset is totally dependent on date selection is bang on. You shift the time frame around on tons of stuff, you turn winners to losers and vice versa.

The thing is, if you're invested in stuff that only pays when you sell it, that's the whole story. There's no BC dividend. Either you buy low and sell high, or you don't get anything. Not that there's no money to be made that way; of course there is and I think there's room still to make a pile of money off bitcoin as a currency speculator if that's your thing. I don't get into it myself because I don't think I have the risk tolerance and I don't think I have the level of specialized understanding necessary to do well on currency markets.

My ETFs are mostly ones I have to sell in order to benefit from but at least in theory, they represent some fraction of ownership in a company that has assets etc etc. My stocks are almost entirely investments in companies where I understand what they do and what they own, and in a lot of cases they're dividend-paying stocks because the asset earns for me if I just keep it. Bitcoin is really the polar opposite there so it'll probably never be something I consider an investment; I could see making volatility trades with it (which I sometimes do with other stocks when I see something heavily discounted) if I had the available capital, though. FTX jitters are probably driving down prices almost as far as they're going to go right now; there will be a bounce pretty soon, I'll bet. If you have the money to make the bet, there's probably gains to be had.

But as an actual system for doing anything, there I'm pretty much a full BC skeptic, personally. I get what it offers but I think the drawbacks outweigh the advantages.

[GJM]

https://www.cnbc.com/2022/11/21/grayscale-wont-share-proof-of-reserves-due-to-security-concerns.html

KEY POINTS
Grayscale, the asset manager running the world’s largest bitcoin fund, said in a statement Friday that it won’t be sharing its proof of reserves with customers.
“Due to security concerns, we do not make such on-chain wallet information and confirmation data publicly available through a cryptographic Proof-of-Reserve, or other advanced cryptographic accounting procedure,” Grayscale wrote in a statement.

[MickAK]

I don't think I have the level of specialized understanding necessary to do well on currency markets.


Or probably the desire for an Adderall addiction.

There's enough resources available nowadays to turn yourself into a pro but goodness, what a miserable life. My friends that stayed all in are miserable, even the outwardly healthy ones. No amount of money is worth that to me.

[Maple Syrup Actual]

Or probably the desire for an Adderall addiction.

There's enough resources available nowadays to turn yourself into a pro but goodness, what a miserable life. My friends that stayed all in are miserable, even the outwardly healthy ones. No amount of money is worth that to me.

Yeah, if there's one thing I've learned in life, it's that trying to turn a fun hobby, like using drugs, into a full time occupation really sucks all the fun out of it.

[GJM]

Crypto is the latest version of the Wild West. What does it say about the state of transparency and risk management, when one of the largest players just tells the bankruptcy court $1.7 billion with a b has gone missing. And even savvy investors were hit.

WSJ:

The collapse of FTX has placed Sequoia SEQ -1.85%decrease; red down pointing triangle Capital in an unfamiliar position: damage control mode.

The early backer of Apple Inc., Alphabet Inc.’s Google, and Airbnb Inc.—and one of Silicon Valley’s most successful venture-capital firms—apologized to its fund investors in a conference call Tuesday for its $150 million loss on the crypto exchange FTX and vowed to improve its due diligence process for future investments, said people familiar with the matter.

[GJM]

More from WSJ:

Crypto Speculation Is All But Over. Its Systemic Troubles Aren’t.

The decline in bitcoin looks a lot like the decline in other super-speculative assets. But more failures of crypto firms could push it lower still.

James Mackintosh
Nov. 22, 2022 at 12:09 pm ET

The simplest approach is to look at the fall in prices. From its November peak bitcoin is down 77% against the dollar, a horrible drop. Just from the first troubles in crypto back in May—before Sam Bankman-Fried‘s FTX stepped in to calm things down—bitcoin has almost halved. And since the run on FTX began with a CoinDesk story about its interlinked hedge fund earlier this month, leading to its bankruptcy, the price is down more than 20%.

There’s no way to say for sure how much confidence in the crypto ecosystem was knocked by the cascading wave of failures. But at the extreme, the 77% fall in price isn’t that far from the 85% fall in U.S. bank stocks from peak to trough in the 2007-2009 financial crisis. Bitcoin’s better than the banks, too, since it can’t itself go bust, even if the exchanges that enable trading of it appear to be falling like dominoes (and unlike banks, don’t have the Federal Reserve to save them). Take this view, and perhaps much of the loss of confidence in the system is already priced in.

There is further evidence for that from the withdrawal of speculators. Some of the crypto hedge funds had no choice but to stop trading, because their money is locked up in failed exchanges. Others have chosen to take less risk, which means less real money to support the value of crypto.

The evidence is, first, that there’s less demand to borrow crypto assets, because speculators no longer want to take on extra risk. The interest that can be earned by lending out tether, a “stablecoin” tied to the value of the dollar, has dropped to just 2-3%—less than can be earned on risk-free dollars themselves. There is pretty much no demand to borrow bitcoin, with lending rates on Aave and Compound, two decentralized finance platforms for matching borrowers and lenders, close to zero.

Second, spreads on popular arbitrage trades have widened out dramatically. These are trades that flourish when investors want to take risk, because the gains are easy to calculate—examples include profiting from the gap in prices for the very same crypto on different exchanges, or buying stock-market-listed firms that hold crypto at a discount. These and other arbitrage trades are out of favor, because they need lots of leverage and involve the risk of the counterparty, the exchange or the listed firm, failing.

Third, the amount of stablecoins outstanding has plunged as borrowing is repaid. There are just $65 billion of tether outstanding, from a peak of $83 billion in May.

Yet, much of the fall in prices this year had nothing to do with the crisis in crypto. From the peak to the first set of blowups in May prices collapsed as the 2020-21 bubble deflated. Treat crypto as what it really is—a gambling token dressed up as an investment asset—and it is clear that bitcoin dropped exactly in line with other similar highly-speculative bets.

From the peak, bitcoin deflated closely in line with the deflation of the ARK Innovation ETF, which had also attracted a lot of speculative private investor interest for its bets on lossmaking do-or-die technology stocks.

The close link to ARK Innovation even continued during the blowups of crypto in May, when the TerraUSD algorithmic stablecoin collapsed. Lender BlockFi and broker Voyager Digital hit trouble, and Mr. Bankman-Fried stepped in (though Voyager still went bankrupt). Only when Mr. Bankman-Fried’s FTX itself failed this month did bitcoin and ARK Innovation diverge.

There is a tiny bit of logic connecting the ARK ETF and bitcoin, as the ETF holds shares in listed crypto broker Coinbase. But it has far bigger bets on cloud computing, gene therapy, e-commerce and Tesla than on the blockchain. The true link is the reliance for value on major tech breakthroughs and adoption—and since a year ago, the shared drop in that value.

If we take only the additional drop in bitcoin since it diverged from ARK Innovation, it means the systemic crisis in crypto has led to a fall of a bit more than 20%. That doesn’t sound like much.

As backup to this view, both ARK and bitcoin have also traded this year very much like a triple-leveraged version of the S&P 500. Indeed, when the FTX problems began bitcoin and the ProShares Ultrapro 3x-leveraged ETF had been down almost exactly the same amount, 56% and 58% respectively. Again, the link between the two broke only when FTX ran into trouble.

With Genesis Global Capital teetering on the edge—“We have no plans to file bankruptcy imminently,” a spokesman said on Monday—the systemic troubles in crypto don’t seem to be over.

But for true believers, systemic problems are just something that crypto has to live with, because part of the point of a trustless blockchain is that it is not government-issued money—and so doesn’t get government-backed rescues, either.

“It’s crypto being crypto,” said Omid Malekan, who teaches blockchain and crypto courses at Columbia Business School and counts himself a believer. “The people who came in because of the hype, the FOMO [fear of missing out], the rising prices and didn’t have a fundamental understanding of what’s going on have all blown up.”

If they’ve really gone, maybe the bubble itself is fully deflated. But prices will still fall further if more crypto firms fail, as seems likely. As Mr. Malekan says, no one should buy crypto unless they are happy to see prices fall by half in the short run. They easily could.

Write to James Mackintosh at james.mackintosh@wsj.com

[Darth_Uno]

WSJ and CNBC just generates revenue from clicks and fearmongering. I don't know the last time they produced anything useful.

At least they kept this part in:


But for true believers, systemic problems are just something that crypto has to live with, because part of the point of a trustless blockchain is that it is not government-issued money—and so doesn’t get government-backed rescues, either.

“It’s crypto being crypto,” said Omid Malekan, who teaches blockchain and crypto courses at Columbia Business School and counts himself a believer. “The people who came in because of the hype, the FOMO [fear of missing out], the rising prices and didn’t have a fundamental understanding of what’s going on have all blown up.”

If you (not you GJM, "you" generally) think a 60/40 stock/bond mix is the way to go...crypto's just not for you. That's fine, and your investments will almost certainly be fine. There's also people that will go 100% into cryptos and make a staggering fortune, and plenty of people that guess wrong and lose 100%. Look up LUNA, if you didn't see that whole debacle.

If you (again, generic "you") just don't like, trust or understand Bitcoin or other cryptos, then just buy more SPY. That's the Glock of investing, and never a bad choice.

[GJM]

WSJ and CNBC just generates revenue from clicks and fearmongering. I don't know the last time they produced anything useful.

At least they kept this part in:



If you (not you GJM, "you" generally) think a 60/40 stock/bond mix is the way to go...crypto's just not for you. That's fine, and your investments will almost certainly be fine. There's also people that will go 100% into cryptos and make a staggering fortune, and plenty of people that guess wrong and lose 100%. Look up LUNA, if you didn't see that whole debacle.

If you (again, generic "you") just don't like, trust or understand Bitcoin or other cryptos, then just buy more SPY. That's the Glock of investing, and never a bad choice.

I assume you are kidding about your comments on the WSJ.

A week ago, I gave my investment advisors a quiz, and it was on Jan 1, 2022 would you have rather invested in:

1) Chinese property developers.

2) Crypto

3) 5 year T Bills.

[Darth_Uno]

I assume you are kidding about your comments on the WSJ.

Nope.



A week ago, I gave my investment advisors a quiz, and it was on Jan 1, 2022 would you have rather invested in:

1) Chinese property developers.

2) Crypto

3) 5 year T Bills.

That's a little loaded; you talking about cashing out at one year, or 5 years, or 20? Long term, I pick option 4 - just get more SPY and bonds, or a target retirement fund. Short term, if we could pick 'em right, we'd all be millionaires eh? People plenty smarter than me with a whole lot more resources have tried to crack the code.

I'm just saying if you think there might be something there, bet a little bit on black. If you don't think so...then just don't buy it. No different than Tesla or Gamestop. There's a lot of different reasons you might or might not invest in those, and a good deal of your success has to do with timing. With an S&P 500 fund or ETF, time is on your side. Just buy it and wait. And if SPY ain't worth more in 20 years, we all got problems.

[the Schwartz]

Isn't an EMP a localized weapon? Unless it takes out every. single. Bitcoin node in the entire world, then Bitcoin continues to work.

You just have to replace your fried device and sign back in. That would be inconvenient. It's not the end of Bitcoin.

Oh my...

My comments never addressed what would happen to cryptocurrency (of any sort) in the event of an EMP attack. You must've misread my post. I have no idea where you got the idea that I said anything about the effect of EMP on cryptocurrency.

As for EMP attacks on our nation, detonation altitude can extend the range of just a couple dozen weapons to cover our entire nation. Without the capability to quickly replace a destroyed electronic device (which would certainly occur in such a wide scale event), your cryptocurrency is useless even if it sits elsewhere in a server far away.

Crypto might be a lot of things, but a source of stability it is not.

[David S.]

Oh my...

Sorry for my inappropriate use of quote.

I was addressing the silly EMP argument against crypto. Not your comment directly.

[the Schwartz]

Sorry for my inappropriate use of quote.

I was addressing the silly EMP argument against crypto. Not your comment directly.

''Ah, I see'', said the blind man. :cool:

Happy Thanksgiving.

[GJM]

How Crypto’s Collapse May Have Done the Economy a Favor

Crypto’s lack of connections with traditional finance means its problems haven’t spilled over to the economy

Greg IpUpdated Nov. 23, 2022 at 10:42 am ET

This year’s crypto collapse has all the hallmarks of a classic banking crisis: runs, fire sales, contagion.

Check out the bankruptcy filings of crypto platforms Voyager Digital Holdings Inc., Celsius Network LLC and FTX Trading Ltd. and hedge fund Three Arrows Capital, and you won’t find any banks listed among their largest creditors.

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While bankruptcy filings aren’t entirely clear, they describe many of the largest creditors as customers or other crypto-related companies. Crypto companies, in other words, operate in a closed loop, deeply interconnected within that loop but with few apparent connections of significance to traditional finance. This explains how an asset class once worth roughly $3 trillion could lose 72% of its value, and prominent intermediaries could go bust, with no discernible spillovers to the financial system.

“Crypto space…is largely circular,” Yale University economist Gary Gorton and University of Michigan law professor Jeffery Zhang write in a forthcoming paper. “Once crypto banks obtain deposits from investors, these firms borrow, lend, and trade with themselves. They do not interact with firms connected to the real economy.”

FTX’s Bankruptcy: Three Things to Know
FTX’s Bankruptcy: Three Things to Know
FTX’s Bankruptcy: Three Things to Know
The collapse of FTX has set off the largest crypto-related bankruptcy ever, and court filings are already shedding light on what went wrong and how complicated things could get. Here are three things to know about the company’s bankruptcy process. Photo: Lam Yik/Bloomberg News
A few years from now, things might have been different, given the intensifying pressure on regulators and bankers to embrace crypto. The crypto meltdown may have prevented that—and a much wider crisis.

Crypto has long been marketed as an unregulated, anonymous, frictionless, more accessible alternative to traditional banks and currencies. Yet its mushrooming ecosystem looks a lot like the banking system, accepting deposits and making loans. Messrs. Gorton and Zhang write, “Crypto lending platforms recreated banking all over again… if an entity engages in borrowing and lending, it is economically equivalent to a bank even if it’s not labeled as one.”

And just like the banking system, crypto is leveraged and interconnected, and thus vulnerable to debilitating runs and contagion. This year’s crisis began in May when TerraUSD, a purported stablecoin—i.e., a cryptocurrency that aimed to sustain a constant value against the dollar—collapsed as investors lost faith in its backing asset, a token called Luna. Rumors that Celsius had lost money on Terra and Luna led to a run on its deposits and in July Celsius filed for bankruptcy protection.

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Three Arrows, a crypto hedge fund that had invested in Luna, had to liquidate. Losses on a loan to Three Arrows and contagion from Celsius forced Voyager into bankruptcy protection.

Meanwhile FTX’s trading affiliate Alameda Research and Voyager had lent to each other, and Alameda and Celsius also had exposure to each other. But it was the linkages between FTX and Alameda that were the two companies’ undoing. Like many platforms, FTX issued its own cryptocurrency, FTT. After this was revealed to be Alameda’s main asset, Binance, another major platform, said it would dump its own FTT holdings, setting off the run that triggered FTX’s collapse.

Genesis Global Capital, another crypto lender, had exposure to both Three Arrows and Alameda. It has suspended withdrawals and sought outside cash in the wake of FTX’s demise. BlockFi, another crypto lender with exposure to FTX and Alameda, is preparing a bankruptcy filing, the Journal has reported.

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The density of connections between these players is nicely illustrated with a sprawling diagram in an October report by the Financial Stability Oversight Council, which brings together federal financial regulators.

To historians, this litany of contagion and collapse is reminiscent of the free banking era from 1837 to 1863 when banks issued their own bank notes, fraud proliferated, and runs, suspensions of withdrawals, and panics occurred regularly. Yet while those crises routinely walloped business activity, crypto’s has largely passed the economy by.


A diagram from an October report from the federal Financial Stability Oversight Council that illustrates the interconnected nature of the crypto universe.
To be sure, some investors, from unsophisticated individuals to big venture-capital and pension funds, have sustained losses, some life-changing. But these are qualitatively different from the sorts of losses that threaten the solvency of lending institutions and the broader financial system. While such losses can’t be ruled out, banks’ exposure to crypto comes primarily from supplying custodial and payment services and holding crypto companies’ cash, such as to back stablecoins.

Traditional finance had little incentive to build connections to crypto because, unlike government bonds or mortgages or commercial loans or even derivatives, crypto played no role in the real economy. It’s largely been shunned as a means of payment except where untraceability is paramount, such as money laundering and ransomware. Much-hyped crypto innovations such as stablecoins and DeFi, a sort of automated exchange, mostly facilitate speculation in crypto rather than useful economic activity.

SHARE YOUR THOUGHTS

Is the turmoil in crypto’s ultimately a good thing? Why or why not? Join the conversation below.

Crypto’s grubby reputation repelled mainstream financiers like Warren Buffett and JPMorgan Chase & Co. Chief Executive Jamie Dimon, and made regulators deeply skittish about bank involvement. In time this was bound to change, not because crypto was becoming useful but because it was generating so much profit for speculators and their supporting ecosystem.

Several banks have made private-equity investments in crypto companies and many including J.P. Morgan are investing in blockchain, the distributed ledger technology underlying cryptocurrencies. A flood of crypto lobbying money was prodding Congress to create a regulatory framework under which crypto, having failed as an alternative to the dollar, could become a riskier, less regulated alternative to equities.

Now, stained by bankruptcy and scandal, cryptocurrency will have to wait longer—perhaps forever—to be fully embraced by traditional banking. An end to banking crises required the replacement of private currencies with a single national dollar, the creation of the Federal Reserve as lender of last resort, deposit insurance and comprehensive regulation.

It isn’t clear, though, that the same recipe should be applied to crypto: Effective regulation would eliminate much of the efficiency and anonymity that explain its appeal. And while the U.S. economy clearly needed a stable banking system and currency, it will do just fine without crypto.

The Effects of FTX

Coverage of the crypto exchange's bankruptcy, selected by the editors

[Borderland]

Investing is a tricky business. I've been through a few market crashes including the 87 and 08 crash. I was heavily invest in large cap growth stocks in 87 and I lost a lot of value. I won't put it into dollars but my lose was around 50%. A lot people went down with me.

Fast forward to 2008. I was still trying to leverage my investment using the same stocks, but I moved all of it into cash about 3 days before the crash. That's like having a premonition about a flight that will crash and not boarding. The market crashed and I wasn't in it.

So I learned a valuable lesson there. Don't get too greedy with your investments.

I like the idea of taking a few thousand to LV or a horse race and have some fun. That's a legit recreational expense but it isn't an investment.

[Bart Carter]

I still can't see crypto as an investment. I see it as gambling that you get in at the right place and time in a Ponzi Scheme.

I think it is funny that the people who buy into crypto, knowing it is unregulated and warned that it is highly speculative at the least, are now crying about how much money they lost and who to blame. Look in the mirror.

[Borderland]

Yes. Holding bitcoin is currency speculation.
Flip side is if you bought BTC at 10k and sold at 60k a few weeks ago, you were a genius.

Nobody ever accused me of being a genius. I barely graduated from HS. It wasn't my fault however because I was born a poor black child down in Mississippi, or something like that. ;)

[RoyGBiv]

Nobody ever accused me of being a genius. I barely graduated from HS. It wasn't my fault however because I was born a poor black child down in Mississippi, or something like that. ;)


https://www.youtube.com/watch?v=5NeS4ueaU6w

[GJM]

Things are really getting bad when the crypto meltdown is driving down G wagon prices!

https://www.curbed.com/2022/11/mercedes-g-wagen-suv-crypto-recession-discount-sales.html

[Maple Syrup Actual]

Things are really getting bad when the crypto meltdown is driving down G wagon prices!

https://www.curbed.com/2022/11/mercedes-g-wagen-suv-crypto-recession-discount-sales.html

Incredible timing - I was actually in the market for one of these and could really use that discount. The full tag was a bit rich for me but at a 40-50% discount I think I could afford one, actually.





Oh wait, no, my mistake, I was thinking of these:

97537

[Joe S]

I still can't see crypto as an investment. I see it as gambling that you get in at the right place and time in a Ponzi Scheme.

I think it is funny that the people who buy into crypto, knowing it is unregulated and warned that it is highly speculative at the least, are now crying about how much money they lost and who to blame. Look in the mirror.

This, 100% (says the guy who has a little bit of bitcoin and litecoin).

[JCS]

I still can't see crypto as an investment. I see it as gambling that you get in at the right place and time in a Ponzi Scheme.

I think it is funny that the people who buy into crypto, knowing it is unregulated and warned that it is highly speculative at the least, are now crying about how much money they lost and who to blame. Look in the mirror.

I sympathize with the people who were scammed by ftx. But people aren’t going to stop buying the scam cryptos until they get burned and exposed for what they are. I say this as someone who did get burned. A mistake I made was that I viewed it as a way to make short term money. I couldn’t explain why the cryptos had value or what sets them apart from all the other forms of money or assets. Once I studied that I sold everything I had and converted to BTC only because it’s the only decentralized form of money that exists.

[GJM]

https://www.cnbc.com/2022/11/28/blockfi-files-for-bankruptcy-as-ftx-fallout-spreads.html


https://www.wsj.com/articles/centralization-caused-the-ftx-fiasco-sam-bankman-fried-regulation-lobbying-assets-funds-cryptocurrency-exchange-11669566906

[David S.]

I sympathize with the people who were scammed by ftx. But people aren’t going to stop buying the scam cryptos until they get burned and exposed for what they are. I say this as someone who did get burned. A mistake I made was that I viewed it as a way to make short term money. I couldn’t explain why the cryptos had value or what sets them apart from all the other forms of money or assets. Once I studied that I sold everything I had and converted to BTC only because it’s the only decentralized form of money that exists.

Now that the Lightning layer is available, I have less reason to have anything other than BTC.

I just bought ammo from Fenix Ammo with crypto.

[GJM]

https://www.cnbc.com/2022/11/28/blockfi-files-for-bankruptcy-as-ftx-fallout-spreads.html


https://www.wsj.com/articles/centralization-caused-the-ftx-fiasco-sam-bankman-fried-regulation-lobbying-assets-funds-cryptocurrency-exchange-11669566906

Snippet from WSJ article


Decentralized exchanges, by contrast, require no custody thanks to the blockchain-based innovation of the automated market maker. An exchange attracts liquidity providers, which deposit tokenized assets into a smart contract. A smart contract is a piece of code stored simultaneously on thousands of computers that use the blockchain to agree on the same result each time the code runs. Collectively, the assets in this smart contract provide an inventory for traders who swap them at prices determined by a formula also contained in the smart contract. For this service, traders pay a small fee on each trade, providing revenue to the exchange and a return to the liquidity providers.

Because smart contracts are publicly visible, the funds within them are easy to audit. Because they can’t be altered by any one person (assuming the underlying code is strong), the money is impossible for any one person to steal. Because no actor assumes custody, there’s no risk of theft by a rogue manager. This system requires us to trust bits of public code rather than potentially culpable humans

[JCS]

Now that the Lightning layer is available, I have less reason to have anything other than BTC.

I just bought ammo from Fenix Ammo with crypto.

Using BTC I assume? When did you get into BTC? I’m relatively new to it so there’s not much appeal to using it as a medium of exchange yet. I’d rather spend fiat and hodl BTC. At some point I’ll spend it but it seems better to just hodl for the price I bought it at.

[JCS]

Snippet from WSJ article


Decentralized exchanges, by contrast, require no custody thanks to the blockchain-based innovation of the automated market maker. An exchange attracts liquidity providers, which deposit tokenized assets into a smart contract. A smart contract is a piece of code stored simultaneously on thousands of computers that use the blockchain to agree on the same result each time the code runs. Collectively, the assets in this smart contract provide an inventory for traders who swap them at prices determined by a formula also contained in the smart contract. For this service, traders pay a small fee on each trade, providing revenue to the exchange and a return to the liquidity providers.

Because smart contracts are publicly visible, the funds within them are easy to audit. Because they can’t be altered by any one person (assuming the underlying code is strong), the money is impossible for any one person to steal. Because no actor assumes custody, there’s no risk of theft by a rogue manager. This system requires us to trust bits of public code rather than potentially culpable humans

Thanks for sharing. I can’t read the entire article without a subscription but the snippet talks about “decentralized” exchanges. Exchanges are centralized (a person, group or org has control) of your funds. But the latter part is spot on.

One of the issues with these exchanges going under is you are buying crypto from them and assuming they actually have the crypto. It’s really an IOU and you’re trusting the exchange that they are good for it if you want to withdraw it. Coinbase admitted if they go bankrupt (like ftx) you’ll lose your crypto. https://fortune.com/2022/05/11/coinbase-bankruptcy-crypto-assets-safe-private-key-earnings-stock/amp/

Unless people store it in their own wallet they don’t really own it.

[David S.]

Using BTC I assume? When did you get into BTC? I’m relatively new to it so there’s not much appeal to using it as a medium of exchange yet. I’d rather spend fiat and hodl BTC. At some point I’ll spend it but it seems better to just hodl for the price I bought it at.

HODLing makes sense. A portion of my paycheck gets direct deposited into bitcoin, so I figure the ammo was purchased with post-drop funds.

There wasn't any particular reason that I couldn't have bought that ammo with a credit/debit card instead. My point was, there are some retailers that will take your crypto currency.

[JCS]

HODLing makes sense. A portion of my paycheck gets direct deposited into bitcoin, so I figure the ammo was purchased with post-drop funds.

There wasn't any particular reason that I couldn't have bought that ammo with a credit/debit card instead. My point was, there are some retailers that will take your crypto currency.

Who do you use to direct deposit if you don't mind sharing? I DCA using strike but I still have to deposit my funds manually.

[David S.]

Currently using strike too. I’m just starting to look into Bitwage, which I understand automates the process.

[GJM]

https://finance.yahoo.com/news/crypto-stocks-teeter-near-abyss-150000942.html

[Bart Carter]

From Palantir co-founder Joe Lonsdale, most crypto companies will 'crash' after years of industry Ponzi schemes:


Overall, I think you're going to have most things crash. [Various crypto lenders, crypto tokens and other parts of the ecosystem were] a Ponzi scheme, and it made no sense whatsoever...[Over the last several years, crypto projects have been] valued not based on cash flows, not based on creating value in the economy, but based on what people would pay for it...

Long term, there's a good part of crypto, but most of what we saw in crypto the last three, four, five years was a speculative bubble driven by cheap money and driven by a lot of these Ponzi schemes...

Despite the recent turmoil in cryptocurrency markets, crypto-based technologies will continue developing more capabilities... Blockchain technology used in cryptocurrencies allows funds to be transferred online without using traditional government or bank infrastructure, enabling a new and important way to move money globally...Blockchain technology will still be an important part of the future...This ecosystem, long term, I think you will have some of this stuff emerge as useful for the world...But that's not all we're seeing right now

[GJM]

Look at the bright side, once crypto works through this implosion, if something emerges it will likely be less expensive and more fraud resistant.

[GJM]

Bearish:

https://www.cnbc.com/2022/12/05/jim-cramer-urges-investors-to-exit-crypto-its-never-too-late-too-sell.html

[MickAK]

Bearish:

https://www.cnbc.com/2022/12/05/jim-cramer-urges-investors-to-exit-crypto-its-never-too-late-too-sell.html

https://fortune.com/2022/10/27/jim-cramer-meta-shares-investing-stocks-apology-zuckerberg-metaverse-facebook/

I retain my position of zero holdings but not because of Cramer advice.

[Clusterfrack]

Meh. I’ve got a decent amount of Bitcoin and Etherium, and plan to hold it.

[David S.]

Jim Cramer advice. ;) ;) ;)

[David S.]

An excellent, high level, discussion on the FTX scandal, etc.


https://youtu.be/RI4xEHI7tGg

[GJM]

Meh. I’ve got a decent amount of Bitcoin and Etherium, and plan to hold it.

This thread has caused me to become more aware about crypto. Are both Bitcoin and Etherium down about 66 percent year to date?

[Clusterfrack]

This thread has caused me to become more aware about crypto. Are both Bitcoin and Etherium down about 66 percent year to date?

Speculative investments like Crypto don't get more money than I can afford to lose--or at least not need for a while. As with equities after a crash, it's likely that prices will increase rapidly and it's almost impossible to predict when. So, I use the same "time in the market, not timing the market" strategy as with most of my other investments.

[David S.]

Down 66% sounds like buying opportunity.

[Clusterfrack]

Down 66% sounds like buying opportunity.

If I hadn't maxed out my mad money, I'd buy for sure.

[45dotACP]

I'd get into crypto before I got into NFTs, but they both seem really ripe environments for parting fools from their money easily.

And when it comes to investing...I am a fool.

I give money to a dude who does this stuff for a living and forget about it for years. It's automatically transferred so I barely even feel the bite.

Hopefully in 20 or 30 years it'll be a lot.

Sent from my SM-A326U using Tapatalk

[GJM]

Down 66% sounds like buying opportunity.

Help me understand why. Is it something intrinsically valuable about the investment or a sense anything down 2/3 must be a bargain?

[jeep45238]

Help me understand why. Is it something intrinsically valuable about the investment or a sense anything down 2/3 must be a bargain?

Nothing about crypto is intrinsically valuable to me - it doesn't solve any problems in the real world, and it doesn't produce anything. It's speculation at best.






This series has been insanely technically minded, and has taught me some things, and reminded me of one thing in particular - I don't want to put any money into crypto.

https://rationalreminder.ca/understanding-crypto

[MickAK]

Help me understand why. Is it something intrinsically valuable about the investment or a sense anything down 2/3 must be a bargain?

Historically that's really not that big of a crash, percentage wise. There's a lot being made about everyone losing their shirt and crypto is dead, but it seemed worse after Mt. Gox.

Gold has industrial uses but otherwise it's intrinsic value is basically just a universal agreement that it's valuable. Given the amount of millionaires made in the last bull run it's going to take a long time for cryptocurrency to lose credibility as a store of value.

Intrinsic value wise crypto has more similarities to the fine art market. There's still a lot of money to be made, I just think amateur hour is over.

[Darth_Uno]

This thread has caused me to become more aware about crypto. Are both Bitcoin and Etherium down about 66 percent year to date?

Yes. So are a lot of other stocks. Stocks which anyone with two brain cells could see were overpriced. But we’re talking brands that everybody knows. PayPal, Netflix, Tesla, Zoom, even Disney…heck, Amazon is half what it was a year ago.


Down 66% sounds like buying opportunity.


Speculative investments like Crypto don't get more money than I can afford to lose.


I give money to a dude who does this stuff for a living and forget about it for years.

Hopefully in 20 or 30 years it'll be a lot.


I lumped all three of your quotes together. If you want to treat it like a lottery ticket, just don’t put more in it than you would on any other form of gambling. But don’t buy it at the expense of proven long term investments. Fund your IRA, 401k, or other retirement accounts first. Then if you want to put a little on crypto or something else, go ahead. I’ve certainly spent more and had less to show for it.

Plus it’s all a matter of perspective. You’re not missing much if you’ve never been on Wallstreetbets, but some of these guys lose thousands in a day. Poof. Gone. Options are a whole lot closer to gambling than crypto.

[GJM]

Pro blockchain piece:

https://www.wsj.com/articles/blockchain-is-much-more-than-crypto-david-solomon-goldman-sachs-smart-contracts-11670345993

[David S.]

Help me understand why. Is it something intrinsically valuable about the investment or a sense anything down 2/3 must be a bargain?

From my perch atop Mt Stupid,

I don't trust "Them." The last couple years of lockdowns, ESG, and de-platformings has made me very cynical.

"They" seem to be actively destroying the dollar. They seem to be trying to institute CBDCs. Among other problems, CBDCs will include something at least adjacent to social credit scores, where they can monitor and control where and how you spend your space credits. The harder they push that insanity, the more valuable being able to trade outside "their" system may become. I think some sort of alternate currency has intrinsic value, if nothing else, as a hedge against the dystopia "They" seem so hell bent on trying to create.

I hope I'm wrong, and hedging against The Empire is unnecessary. I don't know, time will tell.

For a variety of reasons, I think BTC is currently the king of alternate currencies, including precious metals.

To be clear, I'm not so cynical that I'm liquidating my other investments and pushing my chips all in on BTC, nor am I suggesting that to anyone else do so.

[Borderland]

I think I would be more inclined to invest in land in an area that's growing. It's pretty easy to know where that is these days. Of course there's taxes to be paid while you own it and a certain amount of upkeep and keeping people from using it illegally, but if you buy it before the developers do then they have to buy it from you when they want it. I saw that happen where I live as the migration out of metro Seattle area began about 20 years ago. A buildable acre with a road and power went from 20K to 100K pretty fast. Not any buildable acreage left to purchase now and plenty of people would like an acre or two to build on here. My neighbor bought the 5 acres south of me with a run down cabin on it for 125K about 10 years ago. He had been searching the area for a year and moved on the listing lightning fast with cash. I just checked Redfin and the property is worth about 650K now. He refurbished the cabin and built a shop so he might have 350K in it total. That's 300K appreciation in 10 years. There's 7 acres north of me that I've watched for a long time but it's never been for sale. I couldn't afford now but I could have 10 years ago.

[David S.]

Land and precious metals are great stores of wealth, but they’re not liquid. The benefit of BTC is that it is very liquid.

I’m not putting all eggs in the BTC basket, but I think it deserves consideration as part of a balanced, diversified portfolio.

[Borderland]

Land and precious metals are great stores of wealth, but they’re not liquid. The benefit of BTC is that it is very liquid.

I’m not putting all eggs in the BTC basket, but I think it deserves consideration as part of a balanced, diversified portfolio.

Yeah, it's a long term investment. I haven't been investing in land or real-estate except where we live. That used to be a no brainer but not so much these days. The capital investment depends on too many variables for most people to handle, especially in this economy. I worked for my employer for 30 years so knew my pay check was there every month. Most of the work force these days don't have that.

Liquid is the price that day on the market.

https://commodity.com/trading/

Personally if I want liquid I'll just use cash. Cash is king.

[JCS]

An excellent, high level, discussion on the FTX scandal, etc.


https://youtu.be/RI4xEHI7tGg

Saylor is either crazy or a genius. Maybe a crazy genius. I have to limit my exposure to him or I'll want to sell everything I own and buy BTC.

[Darth_Uno]

Yeah, it's a long term investment. I haven't been investing in land or real-estate except where we live. That used to be a no brainer but not so much these days. The capital investment depends on too many variables for most people to handle, especially in this economy. I worked for my employer for 30 years so knew my pay check was there every month. Most of the work force these days don't have that.

Liquid is the price that day on the market.

https://commodity.com/trading/

Personally if I want liquid I'll just use cash. Cash is king.

Your cash lost 8% of its value this year.

Which still beat Bitcoin and Nasdaq pretty handily.

[Tensaw]

From my perch atop Mt Stupid,

I don't trust "Them." The last couple years of lockdowns, ESG, and de-platformings has made me very cynical.

"They" seem to be actively destroying the dollar. They seem to be trying to institute CBDCs. Among other problems, CBDCs will include something at least adjacent to social credit scores, where they can monitor and control where and how you spend your space credits. The harder they push that insanity, the more valuable being able to trade outside "their" system may become. I think some sort of alternate currency has intrinsic value, if nothing else, as a hedge against the dystopia "They" seem so hell bent on trying to create.

I hope I'm wrong, and hedging against The Empire is unnecessary. I don't know, time will tell.

For a variety of reasons, I think BTC is currently the king of alternate currencies, including precious metals.

To be clear, I'm not so cynical that I'm liquidating my other investments and pushing my chips all in on BTC, nor am I suggesting that to anyone else do so.

I'm with you. Well, I seem to recall the late, great Jeff Cooper writing that, at some point, .22LR would become the currency of choice. I still don't think he was far wrong, BTC notwithstanding. That said, I guess it would be kinda tough to purchase a car from a dealership with .22LR (I believe Mr. Cooper referenced purchasing a nice meal with it). so perhaps that's where BTC comes in. Of course, there is always silver and gold for bigger stuff. I *hate* that we can no longer have confidence that the gov won't bitch up the dollar (any more than they already have). Sigh...

[GJM]

https://www.wsj.com/articles/binance-is-trying-to-calm-investors-but-its-finances-remain-a-mystery-11670679351


Binance recently made a commitment to transparency, but it has a long way to go before it discloses enough meaningful information to give investors confidence in its future, accounting and financial specialists say.

The world’s largest cryptocurrency exchange is seeking to reassure customers about the safety of their holdings after the collapse of FTX. Binance’s position means its success or failure will weigh heavily on the entire crypto market.

[GJM]

https://www.politico.com/news/magazine/2022/12/09/crypto-scandal-sam-bankman-fried-ftx-00073178

[Chance]

Pro blockchain piece:

https://www.wsj.com/articles/blockchain-is-much-more-than-crypto-david-solomon-goldman-sachs-smart-contracts-11670345993

This is typical of the blockchain evangelist pieces I see online: high on praise and void of technical detail.

Blockchain is interesting from a conceptual point of view, but I've yet to see any application of it that wasn't a solution in search of a problem. Technically speaking, there's nothing blockchain can do that can't be more safely and efficiently handled by traditional architectures.

Maybe Goldman finally found blockchain's killer application, but I'll remain skeptical until I see a for-real write-up.

[Borderland]

Your cash lost 8% of its value this year.

Which still beat Bitcoin and Nasdaq pretty handily.

I know and I'm comfortable with that. I like to have it around when I want to invest in something I deem a good value. Might buy some real estate in the next year or two if the market crashes like I think it will.

[0ddl0t]

https://youtu.be/cWc6DOYQPbU



Help me understand why. Is it something intrinsically valuable about the investment or a sense anything down 2/3 must be a bargain?

Anchoring:


Anchoring is a cognitive bias in which the use of an arbitrary benchmark such as a purchase price or sticker price carries a disproportionately high weight in one's decision-making process. The concept is part of the field of behavioral finance, which studies how emotions and other extraneous factors influence economic choices.

[JCS]

Help me understand why. Is it something intrinsically valuable about the investment or a sense anything down 2/3 must be a bargain?

Why is 1 year your time value? I can pick a one year span and My 401k has lost money. Same with real estate. Since Covid began in Mar 2020 BTC has tripled in price. The feds have devalued the American dollar since then by printing billions of them in Stimulus checks. The intrinsic value of BTC is that there will never be more than 21 million BTC. No more will or can be created. Inflation is theft and I don't have to worry about that with BTC.

[GJM]

SBF arrested:

https://www.cnbc.com/2022/12/12/ftx-founder-sam-bankman-fried-arrested-in-the-bahamas-after-us-files-criminal-charges.html

[GJM]

Why is 1 year your time value? I can pick a one year span and My 401k has lost money. Same with real estate. Since Covid began in Mar 2020 BTC has tripled in price. The feds have devalued the American dollar since then by printing billions of them in Stimulus checks. The intrinsic value of BTC is that there will never be more than 21 million BTC. No more will or can be created. Inflation is theft and I don't have to worry about that with BTC.

Every investment has risk, but if I was betting which investments might fall to zero in the next year, it would be in crypto.

[RevolverRob]

Just getting it started before it happens...

#SBFDidNotKillHimself (https://pistol-forum.com/usertag.php?do=list&action=hash&hash=SBFDidNotKillHimself)

[GJM]

https://www.wsj.com/articles/sam-bankman-fried-led-years-long-fraud-at-ftx-sec-says-11670931979

FTX founder Sam Bankman-Fried diverted customer funds from the start of his cryptocurrency exchange to support his hedge fund, Alameda Research, and to make venture investments, real-estate purchases and political donations, the Securities and Exchange Commission alleged in a lawsuit filed Tuesday.

The SEC said those moves were concealed from investors who poured $1.8 billion into FTX. U.S. investors contributed $1.1 billion of that total. Mr. Bankman-Fried also failed to disclose special treatment that FTX gave to Alameda on its platform, and financial risks posed by the relationship between the exchange and the hedge fund, the SEC alleged in its civil fraud lawsuit.

[GJM]

https://www.forbes.com/sites/ninabambysheva/2022/12/13/binance-pauses-usdc-withdrawals-sees-3-billion-in-outflows-since-yesterday/

Binance, the world’s largest cryptocurrency exchange, said Tuesday it is pausing withdrawals of the stablecoin USDCUSDC -0.2% while it completes a token swap involving the asset.

[GJM]

https://www.wsj.com/articles/binance-says-accounting-firm-pauses-work-for-its-crypto-clients-11671200654

Cryptocurrency-trading giant Binance said the accounting firm it uses to reassure customers that their money is safe has paused all of its work for crypto clients, and said the outflows from its platform had swelled to $6 billion.

[RevolverRob]

https://www.wsj.com/articles/binance-says-accounting-firm-pauses-work-for-its-crypto-clients-11671200654

Cryptocurrency-trading giant Binance said the accounting firm it uses to reassure customers that their money is safe has paused all of its work for crypto clients, and said the outflows from its platform had swelled to $6 billion.

"Bro, what are you worried about, bro? Crypto is decentralized and has zero intrinsic value. You never have to worry about inflation bro. It's only going up. No bro, alphas and sigmas don't dump and run when things get bad. Only Betas do that bro. Don't be a beta bitch. Betabitchcoin...that would be a great crypto..."

[Darth_Uno]

Well I'm holding mine, cuz I'm on that sigma grindset.

[JCS]

"Bro, what are you worried about, bro? Crypto is decentralized and has zero intrinsic value. You never have to worry about inflation bro. It's only going up. No bro, alphas and sigmas don't dump and run when things get bad. Only Betas do that bro. Don't be a beta bitch. Betabitchcoin...that would be a great crypto..."

Crypto is not decentralized.

[JCS]

Well I'm holding mine, cuz I'm on that sigma grindset.

Personally I view now as a buying market for BTC. Everything happening with FTX and Binance show you must get your coin off exchanges. It really sucks a lot of people lost money. But the scam of ****coins needs to be exposed. I hope people get their stuff off exchanges.

[GJM]

https://www.wsj.com/articles/cryptos-onetime-fans-are-calling-it-quits-after-ftx-collapse-11671327554


Crypto’s Onetime Fans Are Calling It Quits After FTX Collapse
Debacle is last straw for many who embraced crypto during pandemic

‘I wasn’t cautious enough,’ says Dennis Drent, who invested in the crypto market. STEPHEN ROSS GOLDSTEIN FOR THE WALL STREET JOURNAL
By Gunjan Banerji


Dec. 18, 2022 at 5:30 am ET

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Buying crypto was so much fun when it was going up. Now, many onetime fans are getting out.

This year has brought crisis after crisis, raising questions about the industry’s long-term prospects. Two major lenders, Voyager Digital VYGVQ -1.52%decrease; red down pointing triangle and Celsius Network, filed for bankruptcy this summer. The price of bitcoin has plunged some 75% from its peak late last year. For some traders, the recent collapse of the crypto exchange FTX—which is dragging down other firms—was the last straw.

[GJM]

https://www.wsj.com/articles/crypto-is-money-without-a-purpose-ftx-crash-trading-banking-finance-exchanges-brokers-lenders-money-profit-11671479669

[Borderland]

Playing the devils advocate here.

Banks got bailed out in 2008. Tax payers paid for that. Lehman Bros comes to mind here. They were a "legit" investment company that failed. People lost millions. With crypto it will be billions.

So my question to the experts would be, what can a person invest in that's not at risk? I know where most my money is but that isn't the place most people would recommend these days.

For the record I don't do crypto.

[JCS]

Playing the devils advocate here.

Banks got bailed out in 2008. Tax payers paid for that. Lehman Bros comes to mind here. They were a "legit" investment company that failed. People lost millions. With crypto it will be billions.

So my question to the experts would be, what can a person invest in that's not at risk? I know where most my money is but that isn't the place most people would recommend these days.

For the record I don't do crypto.

I heard something recently on a podcast discussing something similar. They were talking about how real estate is typically viewed as a pretty safe investment. Until COVID hit and people stopped paying rent and you couldn't evict them for 2 years. I don't know the answer but in this money printing age it seems risk is necessary to keep up with inflation.

[Borderland]

I heard something recently on a podcast discussing something similar. They were talking about how real estate is typically viewed as a pretty safe investment. Until COVID hit and people stopped paying rent and you couldn't evict them for 2 years. I don't know the answer but in this money printing age it seems risk is necessary to keep up with inflation.


Rental property was a safe bet a few years ago. I think a few people can talk about that more intelligently then I can, but for sure the local governments moved the goal post.

I'm still a believer in real estate but not rentals. Undeveloped land maybe.

Builders shut down because of interest rates and prospective buyers, so that capped that market.

There doesn't look like there is anywhere to park ones money anymore without a great deal of risk or not keeping up with inflation.

[Bio]

Playing the devils advocate here.

Banks got bailed out in 2008. Tax payers paid for that. Lehman Bros comes to mind here. They were a "legit" investment company that failed. People lost millions. With crypto it will be billions.

So my question to the experts would be, what can a person invest in that's not at risk? I know where most my money is but that isn't the place most people would recommend these days.

For the record I don't do crypto.

I am very much not an expert, but I don't think anything is "safe", if by safe you mean for sure going up. The experts tell me that you diversify, which is the same boring old advice that experts have been giving for a very long time. I've never had a financial professional tell me anything is safe, they just say that in the long term diversified mix of stocks and bonds historically goes up, on average. I can't imagine any expert suggests there's one place thats safe, because any one place is far more susceptible to variance than a mix of places.

This is, of course, the human condition. Even the strongest human societies are rocked by variance from one time to another, sometimes by events they control, sometimes by events out of their control.

[jh9]

There doesn't look like there is anywhere to park ones money anymore without a great deal of risk or not keeping up with inflation.

Inflation protected treasuries? (As opposed to ibonds).

https://www.investopedia.com/terms/t/tips.asp

That's what they're there for. The single thing they do is not lose money to inflation at the expense of being locked up like a regular bond with (in a normal market) smaller returns.

[Borderland]

Inflation protected treasuries? (As opposed to ibonds).

https://www.investopedia.com/terms/t/tips.asp

That's what they're there for. The single thing they do is not lose money to inflation at the expense of being locked up like a regular bond with (in a normal market) smaller returns.



That's not a bad option. I'll look into it. Thanks.

[GJM]

https://www.wsj.com/articles/bitcoin-mining-company-core-scientific-files-chapter-11-11671629411?mod=mhp

Cryptocurrency miner Core Scientific Inc. filed for chapter 11 to hand control to creditors, a further indication of the squeeze on mining companies from declines in the price of bitcoin and rising electricity costs.



https://www.wsj.com/articles/crypto-giant-binance-offers-little-transparency-after-ftx-collapse-11671624657

The collapse of the crypto exchange FTX has triggered calls for transparency in the industry. To many investors, the industry’s biggest player, Binance, remains a black box.

[jh9]

Binance, remains a black box.

The whole poorly done fake books thing reminds me of WeWork and their "community adjusted EBITDA." Even if Binance weren't a "black box" it seems like people are keen to let hucksters huck until the train derails.

As an aside to the DIY crypto people: The general population isn't going to manage their coins themselves. "Sorry bro you lost your password those coins are gone" doesn't work for most folks. It's exchange that can hold their hand or nothing, and if all the exchanges are managed like *gestures at everything* then crypto is going to be a hard sell once the big ones all implode.

[JCS]

The whole poorly done fake books thing reminds me of WeWork and their "community adjusted EBITDA." Even if Binance weren't a "black box" it seems like people are keen to let hucksters huck until the train derails.

As an aside to the DIY crypto people: The general population isn't going to manage their coins themselves. "Sorry bro you lost your password those coins are gone" doesn't work for most folks. It's exchange that can hold their hand or nothing, and if all the exchanges are managed like *gestures at everything* then crypto is going to be a hard sell once the big ones all implode.

I don't disagree about people being unwilling to manage their coins. We've come to a point where hiding or memorizing 24 words is too much responsibility for people.

[GJM]

https://www.bloomberg.com/graphics/2022-crypto-contagion-from-bitcoin-to-FTX/

[GJM]

https://www.forbes.com/sites/johnhyatt/2022/12/24/these-crypto-founders-and-bitcoin-moguls-lost-116-billion-in-2022/

[Borderland]

Crypto back in the news.

Looks like the contract you signed when you purchased it has a lot to do if you can recover anything when it goes into bankruptcy.

Those who were holding Celsius no longer have a claim to anything.

https://www.washingtonpost.com/technology/2023/01/05/celsius-crypto-bankruptcy-ruling/

[Nephrology]

Crypto back in the news.

Looks like the contract you signed when you purchased it has a lot to do if you can recover anything when it goes into bankruptcy.

Those who were holding Celsius no longer have a claim to anything.

https://www.washingtonpost.com/technology/2023/01/05/celsius-crypto-bankruptcy-ruling/

Yep, their customers are basically unsecured creditors who will be last in line to get anything out of BK proceedings

[CleverNickname]

Crypto back in the news.

Looks like the contract you signed when you purchased it has a lot to do if you can recover anything when it goes into bankruptcy.

Those who were holding Celsius no longer have a claim to anything.

https://www.washingtonpost.com/technology/2023/01/05/celsius-crypto-bankruptcy-ruling/

If people would follow the "Not your keys, not your coins" rule and not buy the latest shitcoin of the month, that'd fix a large number of the issues with crypto scams.

[GJM]

https://www.wsj.com/articles/inside-sam-bankman-frieds-1-billion-bet-on-a-bitcoin-miner-on-the-kazakh-steppe-11673453716

Just before crypto markets plunged last year, Sam Bankman-Fried’s hedge fund made a $1 billion bet on Genesis Digital Assets, a Cyprus-registered bitcoin miner rigged to consume a small city’s worth of electricity in Kazakhstan.

[45dotACP]

https://www.wsj.com/articles/inside-sam-bankman-frieds-1-billion-bet-on-a-bitcoin-miner-on-the-kazakh-steppe-11673453716

Just before crypto markets plunged last year, Sam Bankman-Fried’s hedge fund made a $1 billion bet on Genesis Digital Assets, a Cyprus-registered bitcoin miner rigged to consume a small city’s worth of electricity in Kazakhstan.Isn't that dude about to go to prison for something like 110 years?

Sent from my SM-A326U using Tapatalk

[GJM]

Isn't that dude about to go to prison for something like 110 years?

Sent from my SM-A326U using Tapatalk

Nope. He used other people's money to hire the best lawyers so he only goes to jail like 50 years.

[45dotACP]

Nope. He used other people's money to hire the best lawyers so he only goes to jail like 50 years.The cynic in me wonders if there's a presidential pardon coming his way because he donated so much of other people's money to get Biden elected...

Sent from my SM-A326U using Tapatalk

[Borderland]

When my funds and pension managers start investing in crypto I'll know it's legit. :D

[mcgivro]

Literally everything involving cryptocurrency/NFTs/blockchains is a scam and/or fraud. This is a fact, not my opinion.

[GJM]

https://www.wsj.com/articles/a-crypto-magnate-saw-the-risks-and-still-was-hammered-11673979412


A Crypto Magnate Saw the Risks and Still Was Hammered
CEO Barry Silbert of Digital Currency Group, a finance veteran who built a crypto conglomerate, now is fighting to keep its b

[JCS]

Literally everything involving cryptocurrency/NFTs/blockchains is a scam and/or fraud. This is a fact, not my opinion.

Please explain how BTC is a scam and/or fraud? I'll grant you the others.

[45dotACP]

I am not an economist...only a cynic.

I dont think crypto is a scam. It's a gamble.


Sure, normal money may be tied to the stability of a country and whether their currency stays stable in value across time...but it looks like problems with the stability of a currency's value is a big problem with crypto. The fact that the only people who have made any money from crypto were the first people to buy in and that the value of crypto is determined by trying to get more people to buy in sounds vaguely like a ponzi scheme or at the very least like Mary Kay.

In addition to that problem, there's tons of shysters and con men who present themselves as these Rhodes Scholar types.

It feels vaguely silicon valley esque in that a bunch of smart dudes who got their engineering or computer science or math degrees convinced themselves that anything else (like developing and managing the value of a currency/exchange) is easier than that so they have all these great ideas that will make the industry better.

But of course it isn't that simple, their ideas have been tried before or are illegal or get infested with grifters and criminals.

Also...no FDIC insurance...

So the people whose money disappeared into Sam Bankman-Fried's pockets when they thought it was just sitting there only to find out it was donated to Joe Biden and to furnish his polyamorus life...the federal government isn't gonna bail their money out. Nobody is coming for them.


For those reasons and more, I have not done the crypto thing.

Sent from my SM-A326U using Tapatalk

[Welder]

I don't know anything about crypto as such, but I'm working on dismantling the remains of a bitcoin minesite right now. It was set up inside a leased out 40k sq ft factory, it had 800A 480V 3-phase service, and it's electric bill was between $17k and $22k a month. It produced so much heat that they didn't need heat at all in the building, and there were giant fans drawing air through at all times.

I've stacked hundreds if not thousands of empty motherboard and graphics card boxes outside, they were ordering these things by the pallet load and just throwing the trash all over the place. Most everything was made in China, to the point that the stickers on them were in Chinese and the power cords for the Pandaminers (complete machines?) were still in the box because they don't fit our outlets here.

[MickAK]

It produced so much heat that they didn't need heat at all in the building, and there were giant fans drawing air through at all times

Back a long time ago the energy cost for heating your apartment was part of the calculation of whether it was profitable to have it on or not.

[GJM]

https://worldnewsera.com/news/finance/stock-market/peter-thiels-fund-wound-down-8-year-bitcoin-bet-before-market-crash/

Thiel

[GJM]

https://www.wsj.com/articles/crypto-lender-genesis-is-preparing-to-file-for-bankruptcy-within-days-11674094044?mod=mhp

Crypto lender Genesis Global Trading Inc. is preparing to file for bankruptcy within days, according to people familiar with the matter.

Genesis, owned by the crypto conglomerate Digital Currency Group, is in the final stage of preparing paperwork before it files for chapter 11 protection, said the people with knowledge of the matter.

The crypto lender has been considering filing for bankruptcy for months and the firm laid off 30% of its staff earlier this month to “navigate unprecedented industry challenges,” a company spokesperson said at that time.

[Doc_Glock]

https://worldnewsera.com/news/finance/stock-market/peter-thiels-fund-wound-down-8-year-bitcoin-bet-before-market-crash/

Thiel

Wow, if that reads like I think it does he's a grade A ass, talking up Crypto while selling off. But maybe that is business as usual for these guys.

[GJM]

Wow, if that reads like I think it does he's a grade A ass, talking up Crypto while selling off. But maybe that is business as usual for these guys.

Come on now, you don't think people get on social media to make you money!

[GJM]

https://www.wsj.com/articles/new-ftx-chief-says-crypto-exchange-could-restart-11674143168?mod=mhp

FTX’s new chief executive, John J. Ray III, said he is looking into the possibility of reviving the bankrupt crypto exchange as he works to return money to the failed company’s customers and creditors.

In his first interview since taking over FTX in November, Mr. Ray said that he has set up a task force to explore restarting FTX.com, the company’s main international exchange. Although top FTX executives have been accused of criminal misconduct, some customers have praised its technology and suggested that there would be value in rebooting the platform, he said.

“Everything is on the table,” Mr. Ray said. “If there is a path forward on that, then we will not only explore that, we’ll do it.”

[GJM]

WSJ today:

Bitcoin extended its recent climb after a new Securities and Exchange Commission proposal for the crypto sector wasn’t as harsh as some investors had expected. The digital currency most recently traded at about $24,403, up 1% from its 5 p.m. ET price Wednesday.

[Bart Carter]

From "The Bank Experience", industry news that I receive:


UK CRACKS DOWN ON BITCOIN ATMS

The Financial Conduct Authority of the U.K. is beginning to target unregistered cryptocurrency ATMs and has gone after sites in Leeds city that allegedly hold the machines.
"Unregistered crypto ATMs operating in the U.K. are doing so illegally," Mark Steward, executive director of enforcement, said in a Coin Telegraph report. He added that cryptocurrency products in general are "currently unregulated and high risk."
The FCA emphasized that all cryptocurrency ATMs must be registered and comply with money laundering laws.

[GJM]

https://www.wsj.com/articles/bitcoin-core-maintainers-crypto-7b93804

Snippet:

Seven years later, Mr. Chow is one of a handful of people who can write changes into the software that underpins the nearly $500 billion cryptocurrency. Their role is critical to bitcoin, yet is largely unknown to the millions who own it.

Known as maintainers, he and four other coders serve as stewards of Bitcoin Core, an open-source program that keeps the cryptocurrency’s digital ledger up-to-date on thousands of computers that make up its network. Their longtime leader departed Thursday, reducing the group’s size to five from six.

[Cheap Shot]

"If fools didnt go to market, cracked pots and false goods would not be sold"

Jean Le Melchanceax - 12th century

The above isnt directed at anyone in this thread other than me. Despite my belief in the above, I'm not sure if Im the fool for not having the vision to recognize crypto's potential and how to profit from it or if "playing it safe" is actually putting me at greater long term financial risk.

[GJM]

Wild world:

https://www.wsj.com/articles/a-trader-says-code-allowed-him-to-withdraw-millions-from-a-crypto-exchange-prosecutors-say-he-crossed-a-line-9f6ddbd7

Snippet:

He then started building a massive holding in MNGO across several crypto exchanges, authorities said. He purchased 488 million of the 500 million MNGO tokens in circulation, according to a lawsuit filed by Mango against Mr. Eisenberg in January.

Within minutes, his purchases pushed the price of MNGO to about 50 cents from 4 cents, according to authorities and Mango’s lawsuit. That in turn lifted the value of the MNGO futures Mr. Eisenberg held.

The run-up allowed Mr. Eisenberg to use these assets as collateral to borrow more than $100 million on the Mango platform in various cryptocurrencies.

He promptly withdrew all of it, according to authorities and the Mango lawsuit. Estimates of the final number vary; Mango