My 2 satoshis (0.00000002 bitcoin)

Manage
1

I thought I’d talk about the elephant in the room about to “take over the world and go to the moon”. It is a true frenzy, taking over Silicon Valley, and lots of younger minds. Let me know your thoughts! The P123 community has been eerily dead silent about it.

Being an engineer I admire the robustness of a distributed ledger. Using just a handful of computers, some block-chain software (not all that sophisticated btw) and the internet, a very robust , tamper-proof ledger is born. Something useful will come out of this, just not yet. Just like the internet, the crypto bubble has to burst to reveal the ideas worth something.

These are the things I don’t like:

  • It’s looking more and more like the gold fever where only the shovel makers made the money. This article shows Bitmain mining hardware with a Kodak logo Kodak slaps its name on a sketchy bitcoin-mining business . It’s nuts.

  • A coin is truly worthless as an investment. Only investment value is what someone else will pay for it - definition of ponzi

  • It’s not a “collectible” either. A painting I can look at, a car I can look & drive.

  • Crypto coin is easily duplicated : copy code , paste it , rename it , click ‘return’

  • It’s bad for environment. Bitcoin farming is currently sucking up the energy of two Hoover dams (4 GW/h)

  • It’s become an addiction creating zombie millennials trading round the clock in South Korea

  • The whole thing is hanging on because 70% of the production is in China, and they can’t dump it since exchanges were banned there.

  • Look at Tesla Giga factory then look at the skanky, depressing bitcoin farms in abandoned warehouses; some even have pools of water on the floor. Which one is inspiring ? Crypto is not making the world a better place (neither is facebook btw)

  • Banks are all prostitutes, it’s true. They make money from your money. But you can sleep somewhat safe. You loose your crypto wallet key, you loose everything.

  • And finally, the greatest benefit of crypto is this ability to send money without a third party , fast, and anywhere in the world. True enough , although apparently not cheap anymore. But who really needs to transfer money all over the world, all the time, instantly ? I transfer my money to my mortgage, the good folks at the IRS, and the supermarket.

my 2 satoshis , which btw are worth about 2 cents now

2

I agree with everything you wrote but want to add that blockchain technology is something that ANYONE can use–it’s non-proprietary, open source, which makes it difficult to monetize; that the limited number of bitcoins give it a severe disadvantage compared to currencies whose supply can fluctuate; that the number of transactions that can be processed per second is extremely low compared to dollars; and that ripple is a complete rip-off in every sense of the word. This is not going to end well.

3

Good post, Marco.

CRYPTO and all its currencies as well as the technology behind (blockchain in its many versions) WILL have a big impact and will be huge in the future. A new era is born and this will not go away. Crypto is in its early infancy and nobody knows where it is going to lead and who is going to profit. Probably in the same stage as the Internet was 20 years ago.

The whole thing will crash-burn in several sectors but some will survive big time. We just don’t know what sectors will be that.
Big banks are working feverishly to come up with their own schemes. Big companies have signed up to the blockchain technology.

Interesting times are lying ahead. Lots of people will get burned big time. Some will be multi-millionairs.
Same thing as always…

4

Thanks Marco!

And BTW I absolutely am not an engineer or programer and have little to add on most of this.

I did listen to a podcast (Econ Talk) about this. I did not pay much attention to most of the discussion but ease of transfer-and possible anonymity–was discussed with regard to illegal activities: drugs etc.

Backing up a little, other podcasts discuss the “end of money.” I this context they mean paper money. Of course, anything we do with banks is a permanent record that—at least with a search warrant—can be obtained by the government. Fusion GPS is battling this in court now. On the Democratic side of things you may wonder if Paul Manafort wishes he would have bought a few of his suits with Bitcoin.

But Republicans, Democrats (or drug dealers) might notice a potential need for paper money and/or cryptocurrencies by even the US Government. After all, without paper money, we would not have been able to drop huge pallets of money from an airplane into Iran. Why didn’t they just wire the money?

I don’t really have a point except to say paper money (for now) and perhaps crypto-currencies allow for economic activity not monitored by the government: for better or for worse.

Great post!

-Jim

5

I have very limited knowledge - haven’t even read the whitepapers. I did listen to Patrick O’Shaugnessy’s podcasts on crypto where he talks to many in the field, so there’s that :wink:

http://investorfieldguide.com/hashpower/

But since you asked :wink: - I guess conceptually, my uninformed take is:

  • there’s a lot of people in the world in places where they are concerned about protecting their assets, often from govt or bad local situations. Crypto addresses those concern so I can see a “need” or a “problem” that crypto can solve for lots of people.
  • gold doesn’t really have much use, but is valuable as a store of value because it’s rare, time consuming to mine more of it, and there’s sortof a cultural agreement that gold has value because we all agree that it does. Maybe old paintings by certain painters fit the same profile. There are other things that are rare and not valuable, but some things like gold or old paintings (or rookie baseball cards) have carved out an elevated place. Frankincense and myrrh were apparently comparatively rare and richly valuable a long time ago but along the way gold became the survivor for now. If the cultural concensus is that bitcoin is a store of value, I can see it surviving in that capacity similarly as gold has survived in that capacity. Gold has some uses (I remember selling some old CPUs for the gold content) but I suspect industrial or jewelry use is pretty limited reason for it’s value. Crypto mentally fits in that same space. But it seems it’s probably dependent upon our cultural agreement to give it value, for which there are precedents.
  • I guess as a thought experiment - if Google or Amazon or Facebook created and backed a blockchain tech/crypto currency - could it easily knock out Bitcoin/Etherium? and if they can, why haven’t they? Is Bitcoin a pets.com or etoys.com or myspace in early days of the internet, or is it more like a survivor like amazon/ebay/yahoo? Google became a thing after the initial tech wreck, only becoming public in 2004 so something huge on the horizon might not even be in existence yet.

Again that’s my totally naive understanding. I guess one thing that I think about with blockchain is that it has potential to take currently expensive and cumbersome transactions and make them far more fluid. Eventually shouldn’t something expensive like a title search on a home purchase be confirmed/demonstrated w/ blockchain? Or proof of creation/copyright? Is there a reason companies could not issue “digital shares” via a blockchain w/ similar rights to dividends and voting rights as traditional shares have? I guess it could create entire new ways of pooling capital and efforts for a real world goal.

I don’t know, it sounds exciting though.

6

I am skeptical of cryptocurrencies. Anecdotally though, we were talking about bitcoin in my jiu jitsu class last June or July and one guy mentioned that his relatives in Venezuela had been using it for some time due to the economic disaster going on there. I was surprised since I hadn’t heard of it actually being used for regular transactions, but he said it was fairly common.

7

The way I think about it is not from investing point of view. It’s speculation so I pretty much use momentum strategy to deal with it. When the price hitting some level, it attracting more buyers to buy. And if the price stop moving, it will fall. People willcash out. Right now, I’m out too. Will I get back in maybe maybe not.

8

This is the killer.

9

I wrote an article about cryptocurrencies recently on our website:

https://inovestor.am/governments-may-burst-crypto-bubble/

In short, I believe developed country (DM) regulators will ultimately cause the bubble to pop at some point when they have analyzed the situation enough and are ready to act to protect main street investors and as an attempt to save the integrity of centralized capital markets.

10

The future benefits of blockchain technology aside, I tend to agree with Charlie Munger’s sentiments regarding it as a currency or store of value.

“You know it is one thing to think gold has some marvelous store of value because man has no way of inventing more gold or getting it very easily, so it has the advantage of rarity. Believe me, man is capable of somehow creating more bitcoin. … They tell you there are rules and they can’t do it. Don’t believe them. When there is enough incentive, bad things will happen.”

The whole premise is built around a common understanding that bitcoin is finite resource and therefore scarce and theefore has value. I don’t guess I understood or heard a compelling argument why can’t/won’t be changed once there is enough incentive for people to do so. The limit seems completely arbitrary to me.

11

As long as there is a value proposition the laws of supply and demand will control the price right now there are many:

  • Protecting your assets from corrupt governments and hyper inflation. Many examples of this.
  • Legal Store of value for now and I’m sure everyone claims the capital gains
  • Underground economy looking for a way to store assets that the government cannot track. Happens everywhere in the world.
  • Speculators(Hard to argue with someone who invested in bitcoin 5 years ago)
  • Trendy right now everyone wants to say I have bitcoins.
  • Thousands of other value propositions some we know and some to be discovered

Short term governments will try to control it and competition will flood the supply. How will that effect the price and future I wish I knew.

12

Darn, I thought this thread was about adding cryptos to P123.

13

Sure we thought about adding cryptos and were are looking for new angles. Backtesting is futile, maybe some TA, but it’s a frenzy and too crazy for that. So we thought about accepting cryptos for membership payments and maybe allowing members to buy them from us w/o the fees of an exchange. Since we would only be selling, the regulations are much looser. It’s when you exchange cryptos for Fiat that it gets the regulators attention. Which brings me to the following conclusion for now:

P123 is about investing. Sidestepping the fact that currency is not an investment, Cryptos survival is in jeopardy until they learn to play nice with incumbents. Cryptofans are young and a tiny bit arrogant with wanting to undo the banking sector and take the power away from governments. They forgot that governments have the switch.

14

Only by accepting that Bitcoin is not an investment and that it can’t be valued, was I able to buy some. This article is a bit old but may help on Bitcoin timing;

http://www.danielwilczynski.com/2017/11/29/bitcoin-price-index/

Personally, I have less than 2% of my investment funds in Bitcoin. If it goes up 5x, great! If it disappears, it won’t kill me.

Walter

15

I think Crypto would be great to add on P123 even only using the existing tools to track them as portfolio assets. I have some crypto and some mining contracts that all started out as fun about 8 months ago. Well, now, as you can image, it’s gotten a little more interesting. This several-hundred-dollar investments have turned into a several-thousand-dollar investment and are with the effort to keep an eye on them. Granted they are less than 2% of my total net worth, but are certainly interesting to watch. I think it would be particular nice to calculating and tracking correlation with other assets. That’s presently difficult to do without doing it on your own. If you were looking to track on price, you could use the once daily price like you do with equities, simply pick a time of the day, perhaps 4PM ET to match equities - those data sets are readily available and I would imagine, largely free.

Have the portfolio-style tracking capability of P123 to track my crypto would be handy. It would also be a great way to introduce crypto investors to other asset classes and again the ability to see, calculate and track correlation between crypto and other assets would be very nice when integrated into a dedicated crypto portfolio or mixed with other assets using a book.

16

it is always preferable to know the market you invest in,

the bitcoin market is the current number 1 cornered market in the world,

the bitcoin market was developed by agencies prior to 2008 as a supplement to the forthcoming fiat crisis, the bitcoin is regulated, hence the bubble inflating deflating etcetera etcetera, standard economic policy in a system of capital

anonymous barters to trade cannot exist - no trading would every occur, - one way or another every barter that occurs can be tracked and traced

currently fiat paper is the most anonymous barter for trade, not 100% anonymous, but currently still the best

long term real fortunes are still made on the stock market

bitcoin to invest long term is similar to the pink sheets companies, unless your an insider or informed stock promoter the chance of any profit on investment is slim, not unlke today,s bitcoin market

the future for bitcoin seems strong, the CME now have a orderbook in bitcoins for trading, central banks have upped the ante, what value the future bitcoin!, with limited supply the sky is the limit, or will future changes to the rules of the game dampen the upside,

for most of the informed, success in investment are odds in favor of a favourable outcome for the investment dollars, this axiom currently does not apply to bitcoins

17

Ciao Marco!

Interesting that you started this thread. I’m in crypto since 6 month and I could really see value in having cryptos as an asset class at P123 next to stocks and ETFs. Admittedly, only technical analysis is possible, but MACD and RSI are useful even with very volatile cryptocurrencies.

My investment horizon is 5-10 years, so I don’t care much about daily or weekly fluctuations. It is important to understand that

  • blockchain technology is in very early stages (like the www back in 1994); lots of programming lies still ahead and nobody knows which aspects of blockchain technology will become mainstream yet.
  • cryptocurrencies are only a small part of blockchain technology - and bitcoin is only one of over 1400 cryptocurrencies; there are a lot of promising projects and applications being developed, but there are also a lot of scams.
  • only those projects whcih really remove middlemen will eventually have success. To mention a few examples: money remittance (done by many millions of oversee workers every day), insurance (smart contracts), publishing / media rights (direct interaction between artists and customers).

I’m mostly interested in blockchain products which are already implemented. One of them is the Basic Attention Token (BAT) where internet users can reward their favourite websites and Youtube channels by awarding them tokens via the Brave web browser (see attached screenshot example and this talk Facebook Tech Talk with Brendan Eich on Vimeo).

So with blockchain technology there are great opportunities to distribute wealth among individuals rather than large corporations. Definitely exciting times ahead and far more interesting than the price fluctuations of bitcoin which seems the only topic that most journalists are able to report on…

hth,
Florian

brave.jpg
brave.jpg828×421 74.1 KB

18

Marco,

you could seriously expand your customer base by including cryptocurrency analysis - even if it is purely technical. This is not offered anywhere else at the moment.

And you can download the daily price data from Coinmarketcap.com.

19

There will be plenty of public companies soon that leverage blockchain with their own industry classification.

As far as “currencies” it might be too early to get involved. TA is not very useful right now in my opinion. The appeal of TA is that you only need price data to figure out where the “support” & “resistance” is, which are really based some fundamental valuation metric. For example if the price drops, value money comes in for support. If price keeps going up is because of some future value not yet represented in the fundamentals.

There’s no way to put a value on crypto currency until some sort of utility is found. Right now the mission of crypto currency is to destroy banks and take power away from governments. That’s their mission. I would really like to see a movie of this utopian crypto future with no government, taxes & banks, and everyone is day-trading on their phones. Hollywood should get on it right away!