Cryptocurrencies

[SnarkyPuppy]

How could one possibly compare gold with crypto is beyond me? There is simply no comparison in terms of confidentiality, liquidity, ease to buy and sell, and on and on.

 

Maybe you made lots of money, maybe it will continue but, it isn't comparable at all.

 

Cardboard

 

Agree, there is no comparison - bitcoin wins/will win each of these and more if you are skating to where the puck is going

[Guest cherzeca]

How could one possibly compare gold with crypto is beyond me? There is simply no comparison in terms of confidentiality, liquidity, ease to buy and sell, and on and on.

 

Maybe you made lots of money, maybe it will continue but, it isn't comparable at all.

 

Cardboard

 

Agree, there is no comparison - bitcoin wins/will win each of these and more if you are skating to where the puck is going

 

for me, the skating in this analogy is an ability to understand blockchain tech sufficiently to know what i dont know about this space.  i dont see myself getting on this ice much less skating towards this puck

 

put another way, while i can understand bitcoin as a store of value, there is an alternative to gold and cash/treasuries that is more understandable for me, namely real estate.  has utility, cant replicate land and hard to replicate buildings, can transfer for value (albeit with transaction costs). 

 

when i read pfeffer's interesting analysis, i wonder why he analyzes bitcoin as an alternative to gold only (silver in passing) when he should really also include RE...isnt RE much bigger than gold as a store of value?

[SnarkyPuppy]

How could one possibly compare gold with crypto is beyond me? There is simply no comparison in terms of confidentiality, liquidity, ease to buy and sell, and on and on.

 

Maybe you made lots of money, maybe it will continue but, it isn't comparable at all.

 

Cardboard

 

Agree, there is no comparison - bitcoin wins/will win each of these and more if you are skating to where the puck is going

 

for me, the skating in this analogy is an ability to understand blockchain tech sufficiently to know what i dont know about this space.  i dont see myself getting on this ice much less skating towards this puck

 

put another way, while i can understand bitcoin as a store of value, there is an alternative to gold and cash/treasuries that is more understandable for me, namely real estate.  has utility, cant replicate land and hard to replicate buildings, can transfer for value (albeit with transaction costs). 

 

when i read pfeffer's interesting analysis, i wonder why he analyzes bitcoin as an alternative to gold only (silver in passing) when he should really also include RE...isnt RE much bigger than gold as a store of value?

 

RE is not easily transferable and your ownership is subject to the whims of government authority (ie you can be evicted from your house, nobody can take your private bitcoin unless they torture you).  Keep in mind that these are theoretic extremes - but the concept of gold as a hedging asset taken to its logical extension is also a theoretic extreme. 

 

The most valuable aspect of bitcoin is that it is private property which cannot be taken from it's owner. 

[Guest cherzeca]

@snark

 

there are far fewer transaction costs to me to buy and sell RE than BTC.  i would have to understand BTC first of all, which i really dont, whereas i sort of understand RE.

 

also BTC can be (and i expect it to be) regulated just as much as RE.  no one is taking my RE away from me without compensation.  it's there in the US constitution.

 

look at RE values in NYC, london, miami beach.  store of value with utility

[SnarkyPuppy]

@snark

 

there are far fewer transaction costs to me to buy and sell RE than BTC.  i would have to understand BTC first of all, which i really dont, whereas i sort of understand RE.

 

also BTC can be (and i expect it to be) regulated just as much as RE.  no one is taking my RE away from me without compensation.  it's there in the US constitution.

 

look at RE values in NYC, london, miami beach.  store of value with utility

 

Just like nobody is taking away our jr pref equity rights?  ;D  That's just in jest... I hope! 

 

I'm not saying it's likely in our lifetimes - but on a long enough timescale the immutable property rights offered by bitcoin/decentralized assets are what makes them so inherently valuable.  Real estate and bitcoin can coexist just as real estate and gold currently coexist. 

 

One consideration that made me think about the crypto space from a different perspective was trying to step into the shoes of someone who lives in China, Venezuela, Russia, Morocco, Mongolia, etc as opposed to viewing things from a comfortable American's perspective.   

 

It's definitely possible I'm holding a bag of worthless tulips- but the more I focus less on the popularity/recent price surges and more on the idea itself, I come away believing that there may be something to this thing.  It's imperfect now in the way that DOS was imperfect in the 80's/early 90's - and the beauty of "forking" seems to allow for seamless upgrades to the existing architecture

[Guest cherzeca]

@snark

 

right, except many of the people seeking a store of value in those countries you mentioned own condos in NYC/miami beach

[SnarkyPuppy]

@snark

 

right, except many of the people seeking a store of value in those countries you mentioned own condos in NYC/miami beach

 

And many also own gold.

 

I prefer owning RE to Gold.    But we are talking speculation on the rise of a new store of value - not an investment in a current one.  If we accept that Gold is a speculative flight to safety store of value (90-95% of its value is not based on utility) + make the assumption (just for a second...) that bitcoin beats gold at its own game (durable, scarce, immutable, easily transferable,  etc), then its a simple probabilistic bet on growing network effects currently priced at ~4% odds of working out (assuming bitcoin bull thesis = gold = $7tn). 

[wachtwoord]

The value of bitcoins was in the fact that you could not have more than 21 million bitcoins. Now there are many more alternate coins. Does that still make bitcoins valuable?

 

https://coinmarketcap.com/

 

The value in gold was the limited supply. Now with the many other atom types such as the ubiquitous carbon, other metals such as iron and other precious metals such as silver, all present in much larger quantities than gold, does gold still have value? ;)

 

There are and always will be a hard maximum of 21M Bitcoin. No matter how many other cryptos are created and no matter what kind of fancy names they are given.

[Cardboard]

You should check your math:

 

https://www.cnbc.com/2018/01/02/bitcoin-dominance-of-cryptocurrency-market-lowest-level-ever.html

 

Emily brought a very good point and crypto's as a whole are now valued at around $640 billion with Bitcoins accounting for 36% per this article.

 

So your odds have dropped to 9%. If not, why would you assume that all other crypto's will disappear?

 

This competition among crypto's is not conducive to confidence as dilution becomes real or getting right to the point that Charlie Munger has made.

 

Moreover, if there is only $7 trillion "hidden" in gold today, then why should it jump to $14 as an alternative has emerged? If this is a so good alternative to gold, then many will switch. There are only so many people and money who don't trust the system. And $7 trilion is an overstated amount as around 18% of gold is held by central banks.

 

Then add to this all the gold held by Indians who see gold as a cultural asset, a family treasure. Do you think this is all switching to crypto?

 

Finally, have a look at hedge funds. Once authorities realized that mom and pop could get hurt, they got regulated and truly only the rich can now get their hands on them. That is another risk.

 

Even gold was confiscated by Roosevelt in the 30's. No asset is totally "safe" from governments.

 

Remember 2003? What happens to confidence when electricity goes out? Even gold dropped in 2008 with the crash...

 

Cardboard

[Spekulatius]

Real estate is a Cash Flow generating asset, while bitcoin and gold are not generating anything. Big difference, imo.

[rkbabang]

Even gold was confiscated by Roosevelt in the 30's. No asset is totally "safe" from governments.

 

Remember 2003? What happens to confidence when electricity goes out? Even gold dropped in 2008 with the crash...

 

Cardboard

 

So you are saying that no store of value has ever been perfect?  Yeah no kidding, you are correct, but that doesn't mean we should all go back to using sea shells as money.  Gold wasn't perfect, it was just better than sea shells or pretty rocks.

 

Bitcoin isn't perfect, just better.

 

[wachtwoord]

@Cardboard I advise you to read the research paper on the previous page (p. 28). Basically store of value is worth at least 2 orders of magnitude more than a payments system. Therefore Bitcoin is likely undervalued where the altcoin space is massively overvalued  (Ethereum for instance is valued today 50% above the estimated end state value which could be decades away).

 

Talking about the valuation of the whole crypto space as such is therefore non-productive.

[CorpRaider]

Would you say Etheruem is more like a raw input for other crypto assets/smart contract/transaction protocols or a productive asset (akin to raw land that the developers of other protocols buy and build their structures upon); or neither?  I would never be interested in "digital gold" as I have never been interested in real gold. 

 

If I was interested in either, I would need to be able to trade it to the hillbillies down the road for alpo and shotgun shells if small hands and rocket man decide to touch their buttons.  So I thinking I would prefer real gold.  But in reality I'm hoping I could forgive some treasury debt in exchange for M-16s or Kevlar pants or something.

[SharperDingaan]

What would be the advantage of doing it via ATM? Privacy? Skirting taxes? I really do not care about taxes as we all have to pay them. How does ATM protect privacy? I read on the link that you have to wait like an hour to get your money, 6 verifications to withdraw money  (privacy?) and there are limits to withdrawal. So it leads me to using coinbase.

 

Anything I should be careful of when opening account and giving them info? Just worried about losing all the info if coinbase gets hacked

 

 

I want to experiment with buying bitcoins, to learn the system initially. should I give them all credentials such as date of birth, social, bank account # etc ? I am concerned as I read these exchanges are hacked and would lose all the information in the hands of hackers. What do you advise? It looks like I may need to give all of the info as I give to a brokerage account?

 

If you want to use Coinbase or a similar company than you will need to give all the same info as opening a bank or brokerage account.  If you want to do it without that download a bitcoin wallet to your phone (Bread or Jaxx are good), then find a bitcoin ATM (https://coinatmradar.com/), you simply put cash in the machine and scan your QR receive code from your phone and no one knows you own that bitcoin but you.

 

For most of us there are currently three ways to buy a Bitcoin. Directly from source (bitcoin.org) via an ATM machine, indirectly through an exchange (coinbase), or via a derivative. For the most part, all unregulated (Chicago exchanges excepted). For educational purposes, most would invest no more than a token amount in each, and do a buy/sell on all 3.

 

Per the global AML/ATF requirements, everyone will ask for your basic information. Not all will be as diligent about it. Hence a wallet holder has to recognize that the less information they are willing to disclose, the more likely that other users are going to be from the underworld. Lot of pro's/con's to this, but it is to the wallet holder to act responsibly.

 

Retail Bitcoin is estimated to be 30-50% Japanese, a society in which primarily women (Mrs Watanabe) make the investment decision. Outside of Japan, retail Bitcoin is estimated to be 90% male, between the ages of 24-48. The range runs from a few that are very smart, to a very large number that just think they are smart.

 

As at December 31, 2017 there were 1,381 crypto-currencies in the world. All but 28 trade for less than USD 0.01. The top 5 by market cap are Bitcoin, Ripple, Ethereum, Bitcoin Cash, and Cardano. For most people, buying token through an ICO, is not the road to riches.

 

All our family, are well practiced in the use of crypto currency. The very best are the little old ladies, many of whom have led 'colourful' lives in times past. Mrs Watanabe keeps great company.

 

Good luck

 

SD

 

 

[Guest cherzeca]

@watch

 

I thought pfeffer neatly explained coin overvaluation as payment.  But his explanation for coin undervaluation as store of money was entirely straw man. That coin will replace gold. both limited supply.  Pure leap of faith. IMO

 

edit:  also as to fixed supply point, which is such a preferred alternative to printable fiat.  i didnt see that pfeffer countered the notion that all of these coins can have their tech/platform forked and then you have mini-me coins running all around.  remember the old saw bad money destroys good.

 

 

[rkbabang]

What would be the advantage of doing it via ATM? Privacy? Skirting taxes? I really do not care about taxes as we all have to pay them. How does ATM protect privacy? I read on the link that you have to wait like an hour to get your money, 6 verifications to withdraw money  (privacy?) and there are limits to withdrawal. So it leads me to using coinbase.

 

Anything I should be careful of when opening account and giving them info? Just worried about losing all the info if coinbase gets hacked

 

Buying from an ATM is easier and much quicker (if you have one nearby that is).  You can download your wallet, put money in to the machine, and you have bitcoin.  You can still keep track of your cost basis and pay your taxes after you sell.  You can still open up a Coinbase account later and transfer your bitcoins in to convert back to $USD.

 

If you go through a company such as Coinbase you will need to setup an account (like you have already discovered) verify your ID, SSN, email address, etc.  Then you will need to link your bank account which will take a few days.  Then when you buy bitcoin from Coinbase it takes something like a week to show up in your account.  They also have limits to the amount you can buy/sell in a day/week/month.

 

So with an ATM you have bitcoin in minutes(even if it takes an hour to be fully confirmed at peak times, it is usually less), with Coinbase it will take you over a week from the time you first setup your account until you have bitcoin in your account.

 

The downside of the ATM is that the fees are usually much higher.  So you will save money in the end if you go the Coinbase route (if bitcoin doesn't shoot up in price by the time you get your account setup and your bank account linked and the money transferred in).

 

Another way to buy bitcoin is to find someone who is willing to sell you some.  This can be as quick and easy as the ATM and potentially cost you less (depending on the deal you make), but it can be dangerous meeting a stranger with cash in hand.  If you go this route try craigslist or http://localbitcoins.com/ for people in your area selling bitcoins.  I have never done this, but I know people who have.

 

 

If you do use Coinbase and are worried about them being hacked, after you have your bitcoin in your coinbase account transfer it out to your own private wallet.  This is what I do.  I use coinbase to buy, but I don't store it there.  Coinbase has never been hacked, but it is always a possibility.

 

[rkbabang]

@watch

 

I thought pfeffer neatly explained coin overvaluation as payment.  But his explanation for coin undervaluation as store of money was entirely straw man. That coin will replace gold. both limited supply.  Pure leap of faith. IMO

 

edit:  also as to fixed supply point, which is such a preferred alternative to printable fiat.  i didnt see that pfeffer countered the notion that all of these coins can have their tech/platform forked and then you have mini-me coins running all around.  remember the old saw bad money destroys good.

 

You are misunderstanding Gresham's law. Bad money doesn't destroy good, bad money drives out good (from circulation).  It doesn't destroy the value of the good money, in fact it makes it harder to get and thus increases its value. It is always easy to use the good money if you wish to because the demand is so high.  It is just that people will tend to save the good money and spend the bad.

 

 

 

 

 

[Guest cherzeca]

@watch

 

I thought pfeffer neatly explained coin overvaluation as payment.  But his explanation for coin undervaluation as store of money was entirely straw man. That coin will replace gold. both limited supply.  Pure leap of faith. IMO

 

edit:  also as to fixed supply point, which is such a preferred alternative to printable fiat.  i didnt see that pfeffer countered the notion that all of these coins can have their tech/platform forked and then you have mini-me coins running all around.  remember the old saw bad money destroys good.

 

You are misunderstanding Gresham's law. Bad money doesn't destroy good, bad money drives out good (from circulation).  It doesn't destroy the value of the good money, in fact it makes it harder to get and thus increases its value. It is always easy to use the good money if you wish to because the demand is so high.  It is just that people will tend to save the good money and spend the bad.

 

so you are saying the proliferation of mini-me bitcoin is good for bitcoin?

[SharperDingaan]

Re 'valuation'.

 

Pre Bitcoin; hard currency, gold, and sex, were the world's primary stores of value. If you had to run, you could use them to bribe your way out, and set up anew elsewhere. The distributed ledger has simply given us additional options (more supply), ranging from currency (Bitcoin), through to digital gold (Bit Gold).

 

The demand for hard currency is now spread over additional supply (Bitcoin). Drug dealer, arms merchant  despot, tax avoidance, and bribe demand shifts to Bitcoin as the payment medium, versus hard currency; driving up the price of Bitcoin and lowering the price of hard currency. Computer ransom is charged in Bitcoin for a reason. 

 

Demand for physical gold splits over both physical and digital gold, as digital gold is much more portable - and very good at escaping capital controls. A significant supply problem for physical gold, that resembles the supply of Bitcoin; recycling and new mining makes it progressively less scarce - a sudden switch to digital gold floods the physical market with large quantities of supply, abruptly dropping price.

 

It's also a competitive world.

Nothing prevents groups of CBs from banding together to create a competing 'wealth' coin - to suck some of the demand away from Bitcoin. Most people would prefer not to be co-investing with the 'undesirables' of the world.

 

The technology is disruptive, and fundamentally changes how we do business.

Welcome to some of the changes.

 

SD

 

[Joe689]

You seem to have the best handle on this change.  What companies are you eyeing, or investing in, to benefit from these changes?

[rkbabang]

@watch

 

I thought pfeffer neatly explained coin overvaluation as payment.  But his explanation for coin undervaluation as store of money was entirely straw man. That coin will replace gold. both limited supply.  Pure leap of faith. IMO

 

edit:  also as to fixed supply point, which is such a preferred alternative to printable fiat.  i didnt see that pfeffer countered the notion that all of these coins can have their tech/platform forked and then you have mini-me coins running all around.  remember the old saw bad money destroys good.

 

You are misunderstanding Gresham's law. Bad money doesn't destroy good, bad money drives out good (from circulation).  It doesn't destroy the value of the good money, in fact it makes it harder to get and thus increases its value. It is always easy to use the good money if you wish to because the demand is so high.  It is just that people will tend to save the good money and spend the bad.

 

so you are saying the proliferation of mini-me bitcoin is good for bitcoin?

 

It is at best slightly good and at worst has no effect.  Does the existence of silver, copper, tin, and shiny seashells devalue gold?

 

[SnarkyPuppy]

In case anyone is interested a high quality paper on the economic state and future of the whole crypto space. Very well written and researched:

 

https://s3.eu-west-2.amazonaws.com/john-pfeffer/An+Investor%27s+Take+on+Cryptoassets+v6.pdf

 

Thanks for posting this

[SharperDingaan]

You seem to have the best handle on this change.  What companies are you eyeing, or investing in, to benefit from these changes?

 

We aren't.

 

SD

 

[Guest cherzeca]

@joe

 

i do not have a handle on blockchain tech.  i think i have an emerging handle on the potential uses of blockchain as something that can disintermediate or reduce transaction cost and increase efficiency.

 

the only company that i have found that seems to be aggressively moving to commercialize blockchain in interesting use cases is OSTK...first, in seeking to cut out prime brokerage from finding locates for short selling, which is a very opaque and therefore lucrative business for prime brokers (especially for hard to find names, which are the 80% in this 80/20 market).  of course prime brokers could implement their own blockchain platform, but they wont do it in a way that cannibalizes their own profit center...it has to come from outside

 

would welcome other use case examples/companies

 

 

[zarley]

@joe

 

i do not have a handle on blockchain tech.  i think i have an emerging handle on the potential uses of blockchain as something that can disintermediate or reduce transaction cost and increase efficiency.

 

 

Honest question about efficiency and transaction costs:

Given what I've read about the transaction costs for bitcoin and the amount of computing power needed to validate transactions, it seems like these two points are potential problems, not solutions.  Seems like infrequent, high-priority transactions might be well served, but small and frequent transactions would get killed by the transaction costs.  Is that a bitcoin-specific issue or a more general block-chain challenge?