Shared Top Border
sdcia_head3.jpg (14795 bytes)
SDCIA Message Board
Register Latest Topics
 
 
 


Reply
  Author   Comment  
brycewheeler

Senior Member
Registered:
Posts: 562
Reply with quote  #1 
I must be wackier than a hoot-owl to consider anything as crazy as those cryptocurrencies for a small bit of real estate profits !!!  But here I am asking if any of you guys a lot smarter than I, have any specific recommendations in this wild, wild area.  I know that it is a crap-shoot, totally speculative. Plus, brokers that deal in them are all probably the "pump-and-dump" variety, but hey, for a FEW bucks, why not?


CRAZY

rickencin

Avatar / Picture

Senior Member
Registered:
Posts: 962
Reply with quote  #2 
Cryptocurrencies are great if you are planning to buy some pharmaceuticals from some foreign lands.  Or maybe some historical national treasures from the mid-east or east. 

Face it, in a capitalist society anything is possible with money.  There are people rotting in jail because they don't have $1,000 bail money.  There are people who skipped a credit card payment and their charge rate doubled.  Universal default means all their creditors can jack up their rates.  Piling on, just like those 300 lb. lineman do. I'm sure they would like to borrow some money at a reasonable rate.  There are people who are dying to buy a push cart so they can get on the bottom step of the economic ladder, but can't afford it.  You've seen those TV commercials with desperate dogs, cats, horses and probably reptiles who just need a couple bucks to get their lives on track.  There are just endless ways to use your money.  Enjoy!

__________________
Rick
larrywww

Senior Member
Registered:
Posts: 2,094
Reply with quote  #3 
I've thought about investing in cryptocurrencies and I have done some initial research, but here are some of the considerations holding me back.

1. 99.99%  of all cryptocurrencies are garbage (there are almost a thousand).  They are pump and dump schemes to make the originators fabulously rich and bait clueless investors into putting money into a cryptocurrency that no one else will buy.  There are about a half dozen major cyptocurrencies.
http://www.investopedia.com/tech/6-most-important-cryptocurrencies-other-bitcoin/.  Although some speculate that criminals would turn to bitcoin and related currencies, the truth is that these transactions are to some extent public in nature.  If one wanted true privacy then something like Dash (formerly Darkcoin) and Zcash would arguably offer better platforms.
2. The best known cryptocurrencies--relatively few in number-- have already appreciated exponentially and they are very unstable, not to mention unconventional.
3. Bitcoin has faced multiple crises including the Mt. Gox exchange in Japan simply folded up when hackers stole tremendous amounts of bitcoin from their vaults.  Sure, Bitcoin itself is protected by military grade encryption but if hackers can get into your wallet (and steal your password in the same way people lose their passwords to email, etc,) you are toast.
4. One might argue that Mt. Gox was an outlier situation, but keep in mind that Mt. Gox was handling 70% of the all Bitcoin transactions in 2013 and 2014.  See the wikkipedia entry.   Ultimately, they claimed to have lost 850,000 bitcoin amounting to a loss of 450 million dollars.  Although they also claim that they later found 200,000 of these bitcoin.   Those who were on the losing end not only lost money but if they wanted to contest matters they were forced to participate in a bankruptcy proceeding to contest the losses.  Not fun.  This is one of the disadvantages of having a currency not backed by any kind of government institution.   https://en.wikipedia.org/wiki/Mt._Gox
5. The outcome of the Mt Gox bankruptcy was grim.  Even though Mt. Gox had claimed to have over 500 million in assets after the loss was discovered, by the close of the liquidation the trustee could only find 91 million.  The debtors claim to have lost 2.4 trillion dollars (reflecting the increase in value of the bitcoins during the interim).  In short, this was almost a total loss and investors were ultimately paid pennies on the dollar.  (The ratio was something like 4$ recovered for every $10,000 of loss).
6. One might have reasonably concluded in 2014 that the Mt. Gox scandal would finish bitcoin, but the exact opposite seems to be true.  As late as September of 2013 and through the Mt. Gox crisis the value of bitcoin ranged from $100 to $400 (with a few times where it hit $600, but a less common situation).  In September of 2015, the value was $230.  But after that the value skyrocketed to almost $5,000.   At the beginning of 2017, the value was around $1000 and now it has almost quintupled. The graph almost looks like a lunar trajectory.  Amazing.  Why?  I'm not sure about that.  To me, it's hard to argue this isn't some kind of bubble since a fundamental value for it is so hard to establish.    And it is hard to argue that a value approaching $5000 is somehow well established by the market---it hasn't remotely been in that kind of territory until this year---and the last half of the year.  Some have mentioned super motivated buyers in China and Venezuela, or maybe hedge funds joining the bandwagon once they saw the price trends.  But no one really knows.
7. The latest controversy for bitcoin is in terms of scalability---about how to upgrade the blockchain architecture.  (The dispute has resulted in dividing the bitcoin community into various camps.  See the Forbes article where they debate whether bitcoin may divide into 2 different currrencies, or maybe even collapse).  The problem they are running into is that when a trader seeks to increase the # of bitcoin they need to mine more----and the original architecture is making that increasingly difficult.

Is this just an academic debate?  Not really, it's become increasingly clear that you can't really use bitcoin under its old formula in a retail setting.  An Irish retailer who was doing $100,000 a month in business complained that it would take something like 2.5 weeks just to process a bitcoin transaction.  Which is why they changed---and why making it easier to process bitcoin transactions has become a critical issue.

 https://www.forbes.com/sites/laurashin/2017/06/07/bitcoin-is-at-an-all-time-high-but-is-it-about-to-self-destruct/#40a4388dcb31.

The Forbes article also indicates that alot of businesses are running away from bitcoin because of all the issues.  (Though there was a organization that accepted IRA contributions into bitcoin, which was kind of novel---they also accept Ethereum, which might be a safer bet at this point.)

And the high fees charged in bitcoin transactions---part of the original justification for having a cryptocurrency---are another serious issue.

The truth is that bitcoin has already appreciated in an incredible manner: starting out at $13 and now it is $4732.40.  

https://www.coinbase.com/charts?locale=en-US

So you may be buying at the top of the market---although there is no way to tell whether you are since everything about it is basically a one off and unique situation.  I think there is alot of speculation that maybe the criminal class and/or hedge funds are fueling the speculation on bitcoin and other cryptocurrencies.  But also the Chinese and the Venezuelians---are also important buyers.  (One estimate I've seen is that 80% of the mining occurs in China and 3/4 of the trades involve the Chinese---who are trying to smuggle their money to the West before the government can grab it.)
 
Ethereum had a similar incredible increase---going from single digits to its current value of 388.87.

Obviously, anyone who got into bitcoin early (and hasn't lost their money through Mt. Gox) has seen an exponential rise in value.

But it's also true that so many of the issues are technical and beyond the ken of the average investor.

The forces behind the split at bitcoin are dramatically described in this article.  

http://www.slate.com/articles/technology/future_tense/2017/06/internal_conflict_could_split_bitcoin_in_half.html.

Where else are you going to get notorious characters like Bitcoin Jesus----or The Bitcoin Antichrist?  The Bitcoin Jesus solution would make Bitcoin transactions alot easier and cheaper---whereas the Antichrist would view Bitcoin as more of "digital gold"---a long term store of value that wouldn't necessarily need so many transactions---according to this article.  The Bitcoin Antichrist represents the established order---the guys who don't to change the current architecture despite its problems----although they may be increasingly in the minority.  But given there is no government regulation and bitcoin transactions don't involve banks, but involve a series of private transactions, there is no easy way to resolve the dispute.

Actually, based upon the Forbes article, I would probably gravitate more towards Ethereum or maybe Litecoin since developers like it and there isn't quite the controversy.  Although as the Forbes article also indicates, bitcoin is so much better known than any other cryptocurrency, it may be hard getting general acceptance with the public.  And some of the cryptocurrencies are rather limited in terms of merchant acceptance.

BTW, here is an article on Litecoin, developed by a Google Engineer in 2011.  https://www.coindesk.com/information/comparing-litecoin-bitcoin/.

Litecoin is the cheapest of these cryptocurrencies, currently valued at $71.62, with a 70 fold increase in value since it was launched.

Also, it's not exactly easy to research this issue since the books become outdated by the next crisis almost immediately after publication.

So, on the whole, I don't really have any recommendation.

The Winklevoss twins (Yeah, those guys from the Facebook story) made a proposal to the SEC to start an ETF based upon the price of bitcoin---but it was rejected because this is a wholly unregulated market.  It has been estimated that bitcoin value fluctuates so much----it 5 times more volatile than the S & P 500.  The bigger problem is that in its current formulation it's not very liquid---you could decide to sell and in the 2 & 1/2 weeks it takes to process the transaction---the value could totally tank.  Which are some reasons Ken Fischer recommends against investing in it.  https://www.usatoday.com/story/money/columnist/2017/07/31/bitcoin-may-hot-but-right-investment-you/520447001/

Next time Sean O'Toole shows up at sdcia we should ask his opinion, though I think he would probably advise being cautious since he doesn't believe in gambling type odds.

On the other hand, one blogger mentions a Norwegian guy who bought 5000 bitcoin for $27 in 2009.  (Weird---that wasn't really the price, was it?  Might be a totally apocryphal story.)  Anyway, needless to say, he's killing it (so long as he wasn't wiped out by Mt. Gox).   Whether or not his story is true
it certainly is factual that some investors have made alot of money on bitcoin.
https://steemit.com/bitcoin/@benyu/man-who-s-made-over-usd400-000-investing-in-bitcoin-reveals-his-strategy-part-ii

If I were at all tempted to jump on this bandwagon, I might do so with the cheaper cryptocurrencies. Ripple, which is used for international transactions, costs 25 cents (though it started out at 1 penny in 2015).  Litecoin is trading in the low 70s (though back in March it was selling at 4$).

larrywww

Senior Member
Registered:
Posts: 2,094
Reply with quote  #4 
Which one of these currencies would I invest in (if I had to choose one or two):
Here are the price patterns:

Bitcoin (which has had other accelerations in its history and started out very cheap) starts at around 1000 on 4/1/17 and now has almost quintupled.  The charts I have seen value Bitcoin at .06 in 2010 and it has accelerated over 8000 times since that time frame.  Over a longer time frame, a bitcoin was worth about 231 on 8/31/2015 and it has accelerated sharply 21 times that value since then in a gradual and rather consistent ascent to value.

Ethereum: Value sharply accelerates after 2/20/2017: Value starts 1.7 in 8/10/2015 and is 392 (200 times)

Ripple: Value starts out really cheap at .006 on 8/4/2013.  The current value is 38 times higher.  But there was an early 2017 acceleration: The value on 3/20/2017 was .01 and it accelerated to 25 cents by today.  So, a 25 fold increase during since early 2017.

Litecoin: Value starts at 4 on 3/20/2017 and accelerates 18 times to around 72 today.  The weird thing about Litecoin was that it immediately shot up to 23 when first began and then almost immediately dropped sharply to 4 for most of its existence.

Zcash Value gradually accelerates (not as much as ripple / litecoin).  It has a value of 30 on 2/13/2017 and accelerates (about 9 fold) to 288 today.   But the evolution of Zcash is weird and different from the others: It starts out at a very high value of 625, drops like a rock, then after retreating to 175 starts to gradually rise in value.  It still hasn’t recovered its original value.  The high opening price may mean that the creators were seeking to enrich themselves, though I don’t know that for a fact

Bitcoin cash started out around 63 in August of 2016 and is now over 600 (a 10 fold increase).  Although Bitcoin cash has proven very volatile (even compared to other cryptocurrencies).  Forbes wrote an article stating that its future was uncertain.

The striking pattern that one picks up is that at some point between late February  and April of this year ALL of these currencies skyrocket.  (Actually, for a lot of these currencies it is the 2nd and 3rd week of March of this year).  Why? 

There are other lesser known currencies: dogecoin, namecoin, primecoin, peercoin. namecoin, nxt.  Oddly, all of these currencies even though lesser known, also accelerated in early 2017.  Are investors just shotgunning their investments by investing in all these various currencies?  It can't end well for this many currencies.

Except maybe for Bitcoin (which has a longer history), the striking pattern that one picks up is that at some point between late February  and April of this year ALL of these currencies skyrocket.  (Actually, for a lot of these currencies it is the 2nd and 3rd week of March of this year).  Why? I haven't the slightest idea, but it does suggest a kind of herd mentality, a stampede into cryptocurrencies by investors.  It appears that alot of this action came from Asia, though I can't say that for sure.

I'd probably vote for Ripple and/or Litecoin, if forced to choose any---also because they're cheaper and I wouldn't make a big bet on them.  But this is not really based upon anything tangible, just for armchair bragging rights, as the poster suggested. Although given that all of these currencies have already accelerated---some of them alot---I'm not sure now is the time to buy.

2 other way of looking at cryptocurrencies are their market capitalizations: Ripple and Litecoin are (respectively) 4th and 5th on that list and their Trading Volume (measured last 24 hours) Litecoin is 2nd on the list (even superior to Ethereum, though if one also includes Ethereum classic, that would fall in 2nd place.  Ripple's trading volume is much smaller, maybe 1/5 of Litecoin, 7th overall---far lower. 

One pattern that does seem to hold sway: All of these better known cryptocurrencies usually increase in value.  (Though curiously, even the secondary currencies I listed also accelerated in 2017).

brycewheeler

Senior Member
Registered:
Posts: 562
Reply with quote  #5 
I was hoping to find a fund to invest in that buys a basket of many crypto currencies but it  is difficult to find.  

Some ETF fund families like Van Eck are working on a new crypto ETF  fund but it is months away from starting according to them.

I have found a few tiny companies with fringe crypto services or vague referances to "mining" or some such, with virtually no knowledge known about them and nothing in print about them, not even a mission description about what purport to do.

There is one Canadian co. that comes  close to my liking, synbol  BITCF, but the SEC closed them down for couple of weeks for them to clean up their act, if they can, by Sept 7th.  The only traded stock that comes close to investing in a basket of currencies ithat I have found is symbol GBTC already around $1,000 per share and priced at over 100% above the intrinsic value of the crypto basket of currencies it carries, so it has to sky rocket to be fairly valued.  It is an investment trust type of fund.  That said, it may still escalate given how crazy the market is.   Nothing about crypto currencies resemble anything like other normal markets for stocks, commodities, real estate or whatever. 

I am still looking for that crypto ETF.
brycewheeler

Senior Member
Registered:
Posts: 562
Reply with quote  #6 
Just read on Market Watch (via Fedeity News) that according to "Famed investor 
Andrew Left says Bitcoin Investment Trutst (GBTC) fund is overvalued and expensive"

He also called the fund "expensive and most dangerous"  

Like Vegas, "you pays your money and take your chances"
larrywww

Senior Member
Registered:
Posts: 2,094
Reply with quote  #7 
The whole cryptocurrency market (at least the top dozen ones) all seem to me to be in a bubble mode---having increased in value exponentially since early 2017---except for Zcash, which was ridiculously overpriced, every single cryptocurrency among the best known dozen has increased multiple times--almost always tenfold or better.

So it would seem to have been a doubly bad bet.

But I find the dynamics of this market---not to mention the volatility---extremely confusing.  Unlike a stock or real estate, it's impossible to assess it by any realistic metric.  It's kind of like betting on penny stocks.  One can research the computer architecture, but that is something most investors don't understand---and probably no guarantee of financial success, in any case.

When I first researched this market, having seen how much Bitcoin has increased in value, I thought I would conclude that I should have jumped on the bandwagon alot earlier.

But now I'm not convinced that is true.  

The only time I might be tempted is if there was a new cryptocurrency that was overhyped and seemed to be appreciating at a healthy clip during its first year of existence.  Or maybe if Bitcoin or one of the better known ones crashes dramatically and suddenly becomes cheap (seems unlikely).

Hype really seems to be the explanation for success, in any case.

Although I also agree that this is a Vegas type crapshoot under the best scenario.

This is my central puzzle: What happened in early 2017 that forced all of these currencies into multiple (at least 10 fold or better) gains?  The Asian market appears to be part of the answer since a Chinese investor seeking to evade the government may go to extreme lengths to do so.  Or maybe the hedge funds decided to give it a try since there weren't many other value opportunities.  Part of the answer appears to be the increasing acceptance of Bitcoin and its near relations which made the investment seem more respectable.  I don't think that criminal commerce is likely a large part of the answer (unless you are talking about zcash or others that mask the transaction) because all transactions are completely public (although the identity of the buyer may be obscured).    It is the public nature of the transaction on Bitcoin that is security for the trade---so that you can prove that you own it.  For example, the recent ransomware attempt used bitcoin----and although the identity of the purchaser isn't currently known----the exact Bitcoin trade CAN be identified.   So, I'm not sure to what extent the criminal class is going to seek to rely on something like that if they are doing something truly illegal.  Now legal (by state standards) marijuana trade might because that is a more complicated question----and it might be better and safer than dealing in cash.

rickencin

Avatar / Picture

Senior Member
Registered:
Posts: 962
Reply with quote  #8 
This is pretty much the same problem as buying stocks.  You rarely buy at the bottom or sell at the top.  After you buy the price will be lower the next day.  When you sell the price will go up the next day.  So you need to categorize the risk of this stock into low, medium or high.  Maybe you are willing to put 20% of your available cash into low risk investments.  Maybe you are willing to put 10% into medium risk investments.  Maybe you are willing to put 2% - 5% into high risk investments knowing the likelihood that you will lose it all is high.  Since ETF's are a basket of stocks or items, it should lower the risk a tad. 

You still want to time the market.  The market is so complex that it cannot be modeled.  It's always that exogenous variable that gets you.   Melania Trump getting sick could severely effect the market, but her good health means nothing.  Unfortunately if we go to war with the crazy guy in North Korea we are going to war with Russia and China.  So your hunch is a good as 100 pounds of economic forecasts.   Looking into the future violates causality. 

You pays you money and you takes your chances.

__________________
Rick
larrywww

Senior Member
Registered:
Posts: 2,094
Reply with quote  #9 
In most (not all) instances, those who got in "on the ground floor" did the best with cryptocurrencies.

Actually, one of the cryptocurrencies that I find the most intriguing right now is bitcoin cash.  Today its value is around 619.00.  Its value was as low as 205.00 (on 8/5/2007) and as high as 767.00

But here's the thing: It's only been around for a bit more than a month.  And if you believe you can predict who is going to win the scalability fight.  And actually I think the newly proposed position makes more sense.  Right now bitcoin cash costs like 1/9 of regular bitcoin---and to some investors that may be a better bet.  Although if a decision is ultimately made to jettison bitcoin cash--that could be a bit of a problem.

That's as far as my thinking carries me in terms of investing in cryptocurrencies.

Also, I read an article today (in quartz.com) about how hedge funds who were losing money have been trying to better their track records by loading up on the cryptocurrencies.  Of course, it's kind of a cynical and financially irresponsible move----though is it any worse than what Wall Streeters have done lately?  Also, it follows a pattern like the housing market---the hedge funds were momentum investors---and would dip the toe only AFTER a serious runup.

Any, Wall Street investment was one of my 2 hypotheses about why (maybe) they have been driving exponential appreciation  since early 2017.

But given the split in the 2 Bitcoin currencies the question remains how they will integrate them---or maybe they could decide to keep both---use bitcoin cash for retail and lower dollar transactions and use bitcoin for holding wealth---where fewer transactions are needed.  I probably don't have the technical skill to understand how it will likely be resolved.

On the other hand, there was just a 13 billion dollar selloff of bitcoin currencies.  Analysts are split as to the meaning---whether there the market is going to crash----or it's just a temporary retrograde movement.  These cryptocurrencies are, after all, very volatile---not at all like a regular currency.    https://www.coindesk.com/bitcoin-drops-5000-crypto-markets-see-13-billion-sell-off/

On the other hand, one of the reasons why these cryptocurrencies are an attractive side investment for hedge funds is that their success or failure isn't really linked to most market indicators, or to regular currencies.

Actually, what is interesting about the cryptocurrency is that it primarily seems to be driven by animal spirits, technical discussions aside.  There was recently a company that made $40,000 on what they called a "useless ethereum token."
https://qz.com/1023501/ethereum-ico-people-invested-thousands-of-dollars-in-useless-ethereum-token-uet/

Of course, the very idea of an ethereum "token" is nonsense---it's the data mining that proves the existence of the cryptocurrency.

The other notorious story is about the "dogecoin".  Here is the story:

"Joke coins have a history of taking on a life of their own in the cryptocurrency world. Just look at dogecoin, the granddaddy of humor-based cryptocurrencies. The “doge” in question is a Shiba Inu dog named Kabosu who was photographed looking askance at the camera, an image that then transmogrified into a viral meme. In 2014, as bitcoin was becoming exposed to the mainstream for the first time, a community sprung up online to create a cryptocurrency inspired by the meme. It raised $30,000 for the Jamaican bobsled team to compete in the winter Olympics.

But that wasn’t the end of it. Since then, dogecoin’s value has risen about 20-fold, to a high of over $400 million for all the dogecoin in circulation in June—and that’s despite the fact that no one has touched its code for about two years. Joke coin investors are laughing all the way to the bank."

$400 million on a cryptocurrency named after a dog (used by the Jamaican Bobsled team)----and there are NO algorithims, no data mining.   And both of these situations would be hard to prosecute as a scam since both were (so clearly) jokes.

The current information about dogecoin (the article is somewhat dated) is as follows:

CoinCodePriceMarket CapTrading Volume
DogecoinDOGE$0.00226622$251,343,598.3$11,284,427.6

dogecoin price chart The value of Dogecoin for today is $0.00226622. It has a current circulating supply of 111 Billion coins and a total volume exchanged of $11,284,427.6

This is a really weird situation.  That is almost pure animal spirits.  For this reason, there are no shortage of naysayers who believe that the whole craze will crash and burn---and good riddance.  They certainly have a point.  And that is probably why the overpriced ETF mentioned above was able to gain market capitalization despite being grossly overpriced---cryptocurrencies are the new hot thing.

The New York Times reported recently that entrepreneurs are creating new digital currencies to rapidly raise funds for early-stage ventures. So-called Initial Coin Offerings enable entrepreneurs (or scammers) “to raise large sums of money without dealing with the hassles of regulators, investor protections or accountants.” According to the article, 65 projects have raised $522 million so far in 2017.
https://www.forbes.com/sites/robertwolcott/2017/07/07/the-coming-cryptocurrency-crash-and-why-its-a-good-thing/#2724f3e14eed

But I'm not sure that this means that all cryptocurrencies are garbage---although arguably there should be some limits on their creation.  We don't need a thousand of them---and those not within the top dozen or two dozen are bad bets.  (Though by this standard, dogecoin would qualify.  So let the buyer beware.

mathewhayden655

Member
Registered:
Posts: 1
Reply with quote  #10 

I consider my ability to fortify imperativeness among men the best asset I have. The best way to deal with oversee Assignment Writing Service develop the best that is in a man is by gratefulness and offer assistance. When we are supported, we endeavor to be better. you will be content with everything and your pleasure will be plenteous and wearisome. Cerebrum boggling individuals breed shot. Nobody gets any fulfillment from obliging a silly individual. When you show thankfulness, the subject of your idea sprouts and turns. puzzling post, thankful. keep it up.

brycewheeler

Senior Member
Registered:
Posts: 562
Reply with quote  #11 

Hi MathreHayden655.   Hyperspective tho I may be, it still behooves the spectrum of hypersensitivigy for gargantuan tumors of the globula, apart from the galaxy syndrom pervasive in all post-partum flangula.  However, species of the Western nebulae of Groton
are inborn with gretcha, at least some, altho subdued from the Alzheimers perspective and of course, greatly relieved.  I firmly believe that (I think).

Bryce

lukasbmw

Senior Member
Registered:
Posts: 384
Reply with quote  #12 

I'd rather buy precious metals. 

Silver and or gold.

The supply is actually limited and it's proven. 

In my opinion, it is a much safer and stable alternative to these crypto currencies. 

__________________

Eric Lukas
858 276 0713
http://www.sellitfastca.com
7676 Hazard Center Drive
San Diego CA 92108

I love buying from wholesalers! Will pay up to 78% of ARV.

larrywww

Senior Member
Registered:
Posts: 2,094
Reply with quote  #13 
It rains diamonds on Saturn and Jupiter.

http://www.bbc.com/news/science-environment-24477667

Just saying.
lukasbmw

Senior Member
Registered:
Posts: 384
Reply with quote  #14 

https://www.worldcoinindex.com/coin/bitcoin

Check out the chart.

Look at that heavy volume before the run up in prices.

Now the volume has decreased significantly. Isn't that a red flag?

This seems like a very volatile and risky investment. 



__________________

Eric Lukas
858 276 0713
http://www.sellitfastca.com
7676 Hazard Center Drive
San Diego CA 92108

I love buying from wholesalers! Will pay up to 78% of ARV.

brycewheeler

Senior Member
Registered:
Posts: 562
Reply with quote  #15 
Hi Luca and others.

Yes crypto currencies are a wild and crazy speculation (not an "investment").  I agree silver and gold are far safer commodity investments or speculation as they hace some inherent value widely recognized the world over for many centuries.

Crypto currencies should only be a small %, if any, of mad money speculation instead of a trip to Las Vegas.

Bryce
larrywww

Senior Member
Registered:
Posts: 2,094
Reply with quote  #16 
I agree they should be a small %.
To confirm their volatility:

Bitcoin lost something like 28% of their value this week because of actions taken by the Chinese government.

https://www.bloomberg.com/news/articles/2017-09-15/china-is-said-to-call-for-bitcoin-exchange-halt-by-month-end-j7lblmdg

I think other cryptocurrrencies were diminished as well.

This is an inherent danger since government regulation is always a wild card with such currencies.

That was on Thursday.

By Friday, they started to recover.

Think, really volatile, in other words.

Forbes had an article on 3 reasons to buy and also not to buy bitcoin.
http://fortune.com/2017/08/10/should-i-buy-bitcoin/

On the plus side, given that the # of bitcoin are limited there is an argument that the scarcity will ultimately increase their value.  (Something like 80% of them have already been mined).

Commercially, the article claims there is increasing acceptance of bitcoin:

In 2017 alone, famous names like Andreessen Horowitz and Sequoia Capital have bet on hedge funds that are investing hundreds of millions of dollars into digital currency funds. Meanwhile, the financial infrastructure to support bitcoin and other digital currency is maturing rapidly: Coinbase's GDAX exchange has supported margin trading since March, while the Commodity Future Trading Commission just gave the green light for firms to sell digital currency options and other derivatives.

Another possibility mentioned by the article---you aren't forced to even buy a whole bitcoin---you can buy fractional amounts.



larrywww

Senior Member
Registered:
Posts: 2,094
Reply with quote  #17 
The Financial Times had an article in which it was advocated that bitcoin was worth zero---or alternatively that whatever other value was primarily due to runaway hype.

This is a response to that article.  

https://www.cryptocoinsnews.com/financial-times-writer-says-bitcoin-is-worth-zero-a-response/

Now comes an article in Bloomberg that indicates that not only will there be 2 opposing versions of bitcoin, but likely 3 opposing bitcoin camps by November.  

https://www.bloomberg.com/news/articles/2017-09-20/-bitcoin-jesus-ver-sees-the-digital-currency-splitting-again

Things seem to be getting uglier, although given the lack of easily verifiable objective standards---how can anyone tell?

Once I learned the story behind dogecoin----which started as a joke, see above---I think that anything might be possible in the cryptocurrency market.

Also, China has finally cracked down on bitcoin exchanges since they don't want to permit an easy way to move wealth outside their country.

"While the Chinese government has told cryptocurrency exchanges to stop trading bitcoin, it has not explicitly banned possession and production of the digital currency – offering hope to miners that they can continue to dig out bitcoin and sell them on overseas platforms."

http://www.scmp.com/news/china/economy/article/2112085/chinas-bitcoin-miners-limbo-after-beijing-shuts-down-exchanges

Arguably, the Chinese have been one of the most powerful drivers in the value runup of Bitcoin in 2017.

So, what happens now?

Seems like there alot more questions than answers.



brycewheeler

Senior Member
Registered:
Posts: 562
Reply with quote  #18 
Crypto-currencies have lots of problems but i  think China is just playing games.  I wouldn't trust what they officially say or do one iota.  That and other bad press dropped prices on bitcoin and all related stuff this last week permitting some speculators to get back in at
semi-wild prices instead of insane prices.  

Will take some time to see where this will all lead.  Hard to believe all the money chasing bitcoins, and even more difficult to see the rationale in a civilized centeal bank economy.

Larry, thank you the leads to the articles you cited--will read.

Bryce
larrywww

Senior Member
Registered:
Posts: 2,094
Reply with quote  #19 

Bryce: I don't have a fixed opinion about bitcoin and cryptocurrencies mainly because they appear to involve complexities that trump my pay grade.

Weird, but Jaime Dimon recently called bitcoin a total fraud that would eventually be closed down.

But then it turns out that Chase started making large investments in what they termed a "bitcoin tracker fund"---which I guess permits investment in cryptocurrencies without actually investing in these cyptocurrencies themselves.

https://www.cryptocoinsnews.com/bitcoin-trader-asks-swedish-regulator-to-investigate-dimon-for-trashing-bitcoin/

I will say that government action on these type of currencies is always going to be an issue because there appears to be a schizophrenia about it---some saying that it encourages speculation and/or illegal activity----others believing that it is an evolving area of the economy that should be left alone.

Bottom line: like most things about these cryptocurrencies the answer seems to be: It's complicated.

But the reason it has attracted attention from alot of investors (including myself) is the absolutely breathtaking returns that were posted in 2017---incredible!

 

larrywww

Senior Member
Registered:
Posts: 2,094
Reply with quote  #20 
After China cracks down (although I am a bit unclear about whether Hong Kong has also been shut down), Bitcoin recently hit its highest price point ever (over $5800), although it has retreated a bit since then.

Bitcoin just keeps defying gravity---amazing.
Kane

Member
Registered:
Posts: 5
Reply with quote  #21 
As far as I know, bitcoin is safe to buy now. I plan to invest some money in bitcoin. I think it's a good investment. I also found a good guide - https://bitcoinbestbuy.com/. Maybe someone will be useful
larrywww

Senior Member
Registered:
Posts: 2,094
Reply with quote  #22 
I understand that some want to "dip their toe" with a small amount of money---but I still have concerns about the safety of the entire cryptocurrency deal.

So, here is a story about why I am very much concerned about the safety of these cryptocurrencies.  Most investors have heard about the bankruptcy of Mt. Gox in Japan---which at the time was handling 70% of all bitcoin transactions.  

The scary thing is that the thefts from Mt. Gox apparently began in 2011 and weren't discovered until 2014, at which point the exchange was closed down----which is just one of the bizarre twists in the saga.  The initial loss was reported as 450 million----though subsequent investigation has modified this figure later.  The fact that the theft started in 2011 and wasn't discovered until 3 years later---doesn't exactly instill confidence in the system.  

https://en.wikipedia.org/wiki/Mt._Gox

More recently, an employee (not a hacker) made some kind of misstep which resulted in the locking away (permanently) of 300 million dollars in ethereum. 

 https://www.theguardian.com/technology/2017/nov/08/cryptocurrency-300m-dollars-stolen-bug-ether.

The bizarre thing was that the 300 million was destroyed when someone (apparently in good faith) was trying to correct a mistake---this wasn't a hacker or other evil actor.

In neither case is the loss going to be repaid----who has hundred of millions of dollars lying around to repay the loss?  And even if insurance was to be obtained---the losses are so large that it would threaten the solvency of alot of insurers.

And in the latter case the ethereum wasn't stolen----its value was simply destroyed since no one can restore the lost ethereum at this point.

There have been other stories where computers were stolen or where their owners threw away hard drives---forgetting that they contained bitcoins and other cryptocurrencies.

I realize that no one the board is preaching that this is a good idea---I'm not saying you are---and maybe for a nominal investment it might be OK.

But the more I hear about bizarre episodes like this, the harder it is for me to take this option seriously---and much of the skepticism directed towards cryptocurrencies still seems justified to me.




brycewheeler

Senior Member
Registered:
Posts: 562
Reply with quote  #23 
I still have a lot of questions too and certainly don't recommend it.  For the foolhardy only, just Las Vegas money which a person can afford to lose and not regret it or lose any sleep.

Maybe in few months there will be some ETF's who can sort the wheat from the chaff in the crypto-currency area.  I have heard of a few companies who have contacted the SEC to apply or explore these possibilities.  Seems to be a dangerous minefield for the little guy.

Bryce
Previous Topic | Next Topic
Print
Reply

Quick Navigation:

Easily create a Forum Website with Website Toolbox.

Policy