Author Topic: Cryptocurrencies  (Read 101691 times)

rkbabang

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Cryptocurrencies
« on: May 04, 2017, 07:09:52 AM »
The price of many cryptocurrencies continues to move way up, they have been on a tear all week.

https://coinmarketcap.com/all/views/all/#USD

Bitcoin now has a >$25B marketcap and Ether >$8B.   There are 4 cryptocurrencies with marketcaps above $1B, 13 above $100M, and ~185 of them above $1M.

My once small speculative/experimental positions in BTC, ETH, DASH, & XMR are starting to look significant.


vegaseller

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Re: Cryptocurrencies
« Reply #1 on: May 04, 2017, 09:33:11 AM »
i don't really understand crypto.

It seems like a successful one required widespread adoption, yet being volatile and hoarded by speculators goes counter to merchant adoption. On the other hand one that is stable and non-volatile which merchants may adopt is not one which you can speculate on.

It is basically lose lose.

mttddd

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Re: Cryptocurrencies
« Reply #2 on: May 04, 2017, 09:38:52 AM »
i don't really understand crypto.

It seems like a successful one required widespread adoption, yet being volatile and hoarded by speculators goes counter to merchant adoption. On the other hand one that is stable and non-volatile which merchants may adopt is not one which you can speculate on.

It is basically lose lose.

ya at this point i view it as complete speculation, i know some folks making good money off of that but there is no real downside protection. Also at least on the bitcoin side of things China dominates the mining capacity which adds a whole geopolitical risk to it, sort of defeating the purpose of it all.

premfan

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Re: Cryptocurrencies
« Reply #3 on: May 04, 2017, 09:40:23 AM »
The price of many cryptocurrencies continues to move way up, they have been on a tear all week.

https://coinmarketcap.com/all/views/all/#USD

Bitcoin now has a >$25B marketcap and Ether >$8B.   There are 4 cryptocurrencies with marketcaps above $1B, 13 above $100M, and ~185 of them above $1M.

My once small speculative/experimental positions in BTC, ETH, DASH, & XMR are starting to look significant.

Congrats.  I read the paper on this forum late 2011 and the high conviction posters were framing this as digital gold. I loved the philosophy of the paper.  The math i didnt understand so i stayed away.  For others to learn( myself):

1.) What was thesis when invested?
2.) What is current thesis?
3.) When is this vehicle a sell? Or riding it out using power law?

Thanks

-premfan

rkbabang

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Re: Cryptocurrencies
« Reply #4 on: May 04, 2017, 11:00:06 AM »
The price of many cryptocurrencies continues to move way up, they have been on a tear all week.

https://coinmarketcap.com/all/views/all/#USD

Bitcoin now has a >$25B marketcap and Ether >$8B.   There are 4 cryptocurrencies with marketcaps above $1B, 13 above $100M, and ~185 of them above $1M.

My once small speculative/experimental positions in BTC, ETH, DASH, & XMR are starting to look significant.

Congrats.  I read the paper on this forum late 2011 and the high conviction posters were framing this as digital gold. I loved the philosophy of the paper.  The math i didnt understand so i stayed away.  For others to learn( myself):

1.) What was thesis when invested?
2.) What is current thesis?
3.) When is this vehicle a sell? Or riding it out using power law?

Thanks

-premfan


The math/mechanics of how it works is basically a public ledger secured by "mining" (basically you need enormous compute power to fraudulently edit the ledger) and individual accounts are secured with public key cryptology (i.e. you have a public key and a private key).   

I can't speak for anyone else, but my thesis was, and is, that this solves a number of problems with government controlled currencies and transaction time and costs (especially remittance of wealth across large distances), and blockchains can be used for other things besides money.  With government / central bank controlled currencies you have constant inflation risk.  You have no way of knowing, much less controlling, the creation of new units.  You are not only at the whim of someone else, but that someone else is a political entity.  Politics doesn't make good business, the incentives are not in the right places.   With cryptocurrencies you can know how many new units will be created in the future.  With bitcoin as an example there will never be more than 21 million bitcoins, but with Ethereum there will be a small perpetual inflation, so you can take that into account when trying to figure out what to value them at.  Whereas you have no idea how many US dollars outstanding there will be in year 2026.

As far as transaction frictional costs, western union charges an insane amount to send money across the world and there is really no reason for this in the 21st century.  With a cryptocurrency there is no difference between sending money to someone in the same room as you as there is sending money to someone on a different continent.  You send value directly without middle men.

There are many other uses for blockchains other than currencies.  There are smart contracts.  You could use them to keep track of and trade shares of companies to replace stock exchanges.  Any form of database or record keeping where you wanted it difficult, if not impossible, for the records to be tampered with, etc.

The risks are that these currencies are easy to create.  There is nothing stopping you from downloading the bitcoin code and creating an identical cryptocurrency called premfancoin.  You can even change the parameters on how it works or how it is mined, etc.   I have no doubt that some form of cryptocurrency is the future of wealth ownership and exchange, but I'm not all that sure it will be bitcoin, which was my thesis for diversifying a little bit.  I didn't buy any of the bitcoin clones, such as dodgecoin or litecoin, because my thesis was that bitcoin has first mover advantage and for something to overtake it or even be close to as successful as it a competitor will need to have some type of difference which makes people choose it over bitcoin.  Ethereum is very different it is turing complete.  I don't think ether will be used much as a currency or a store of long term wealth, but will be used for smart contracts and the creation of businesses which run on its blockchain.  It will be more of a short term store of value used for doing business or small everyday transactions, the digital coppers to the bitcoin digital gold.   That is how I see it anyway.  I bought some DASH and Monero (XMR) because I like their privacy features and I wonder if bitcoin isn't just a little too public.  I think there will always be a market for untraceable transactions which can live right alongside bitcoin and ether.  DASH and XMR work differently and while I like XMR better, DASH seems to have the better development/marketing behind it, so I diversified into both.

I have no idea about when to sell.  If my thesis is wrong, sell now.  If my thesis is correct then some or all of these will have marketcaps which will be the equivalent of trillions of 2017 USD someday.
« Last Edit: May 04, 2017, 11:03:59 AM by rkbabang »

premfan

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Re: Cryptocurrencies
« Reply #5 on: May 04, 2017, 04:58:22 PM »
Thank you for the post.  Your level of math and thesis synthesis is above my pay grade.  It seems to me that the blockchain and insert any currency that has trust could fundamentally change the bottom 20 percent of the world's population.  This is a great service and invention if executed. 

solobz

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Re: Cryptocurrencies
« Reply #6 on: May 06, 2017, 11:11:03 AM »
a16z had a recent podcast that I thought was an insightful convo on cryptos for novices (like myself)
http://a16z.com/2017/04/03/cryptocurrencies-protocols-appcoins/

I own pretty insignificant amounts of ethereum and bitcoin. ether has the advantage of (maybe?) being more of a blockchain/platform/application play, rather than a pure store of value like bitcoin, but I know nothing

SharperDingaan

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Re: Cryptocurrencies
« Reply #7 on: May 06, 2017, 03:27:58 PM »
You need to be very clear why you are in these things, and what your thesis is.

You also need to mindful that the distributed security of Bitcoin isn't really working as claimed anymore, as >50% of miners are under the same 'controlling mind'.

SD


Parsad

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Re: Cryptocurrencies
« Reply #8 on: May 06, 2017, 03:39:29 PM »
When your mechanic and plumber start investing and touting the wonders of cryptocurrency, you should start to get concerned!  Both have tried to arrange meetings with me recently on how amazing and hot Bitcoin is, as well as they want to introduce me to their Bitcoin guys.

Also, the fact that Patrick Byrne is now spending Overstock.com money on this, should also concern people!

Cryptocurrency is the future, but the winners will be few and far between, like how Amazon presently leads the internet wars with the dead carcasses of its competitors littering the street or barely surviving.

Cheers!
No man is a failure who has friends!

rkbabang

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Re: Cryptocurrencies
« Reply #9 on: May 06, 2017, 05:52:02 PM »
When your mechanic and plumber start investing and touting the wonders of cryptocurrency, you should start to get concerned!  Both have tried to arrange meetings with me recently on how amazing and hot Bitcoin is, as well as they want to introduce me to their Bitcoin guys.

Also, the fact that Patrick Byrne is now spending Overstock.com money on this, should also concern people!

Cryptocurrency is the future, but the winners will be few and far between, like how Amazon presently leads the internet wars with the dead carcasses of its competitors littering the street or barely surviving.

Cheers!

+1

The last paragraph above articulates the largest risk I see investing in these. That was what I was trying to say when I said that I was sure that this was the future, but not sure that it will be Bitcoin. The way I see it is that this will be a winner take almost all industry. There will be thousands of cryptocurrencies but only 1-3 real winners. My cost basis in my basket of these is less than 1% of my portfolio even though the current value is over 8% right now. I'm not buying any more.