Author Topic: Cryptocurrencies  (Read 330951 times)

DeepSouth

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Re: Cryptocurrencies
« Reply #1160 on: January 08, 2021, 11:22:51 AM »
I am long BTC. One risk I haven't been able to get comfortable with:

If 2/3 of hash power resides in China and if Xi effectively controls all of China in a totalitarian/fascist manner, what is to prevent a 51% attack from the CCP if they deemed it strategic?

If anyone has a good view or link to a view that would be helpful
Thanks


TwoCitiesCapital

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Re: Cryptocurrencies
« Reply #1161 on: January 08, 2021, 02:03:50 PM »

The current rise is clearly unsustainable, but seems like a tricky thing to trade around given the obvious reflexivity in something like BTC (the more people accept it -> the more valuable it becomes) and the "low float" of BTC available relative to potential demand if institutions are truly purchasing.

I, too, am flip-flopping to try to manage both potential upside and downside.

Prior rallies have gone 10-40x from the point they really took off. So let's keep the current context of the roughly 4x rally from 10k in mind. That's roughy where it traded at pre-pandemic and where it traded out before going vertical so that's the base I'm using.

That being said - it's easier to 40x @ a $40 million market cap than a $400 billion, so that must also be considered. Also the unprecedented disconnect  in daily supply and demand must also be considered due to institutional demand having stronger hands and buying larger $. Ultimately, I imagine this will behave similar to others and maybe 10x is about what we can expect to see out of this rally before it blows up again and drops to 20-30k all over.

I've been struggling with how to manage this because it's literally unlike anything I've ever owned. Fortunately, I had foresight that this might be an issue by envisioning what I would do if it did sky rocket to 100k as I was buying it.

I made the decision to DCA BTC to HODL and buy GBTC in an IRA to trade. I'd trade the GBTC around the NAV premium expansion. Buy when it was <15% and sell when it was >25%. Also decided that my total look-thru BTC exposure should be ~30% higher than my desired long-term holding of it to provide me flexibility to trade around it if it did rise without dipping into my desired end-state allocation.

The rise from 15-20k provided an opportunity to exit GBTC, tax free, at 30-40% premiums. I was selling a little every day and neutralizing most sales with new purchases of BTC. Reducing risk, tax free, and making it feel like I was doing something to put my nerves at ease after such  quick run.

Post 25k I stopped neutralizing the GBTC sales. Still selling ~1% of the position every other day or so, but am now actually reducing BTC exposure in a tax free manner. Still holding all of my taxable BTC with limit orders put in ~15% under the market price to catch any downdrafts and consolidations. Have the confidence to do this, even at these elevated prices, because I'm still selling GBTC regularly and these would just act as partial neutralization transactions.

All in all - feeling comfortable about the results. I've taken thousands off the table, tax free, still have roughly 90% of my overall BTC position and am still above my threshold of desired ownership with room to make more sales if we continue to rally. Having the system and the trade activity does relieve some of the anxiety around the position now that 15% of my entire net worth is in it after just 2 months....

rkbabang

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Re: Cryptocurrencies
« Reply #1162 on: January 08, 2021, 02:31:16 PM »
Somebody, somewhere, bought bitcoins for a few dollars.
...and sold them for a few hundred.

One might think they were stupid. Another one might think they acted judiciously, considering the information they had at the moment.
The choice belongs to each of us.

There's this guy:   https://twitter.com/svenmeyer/status/937967112416509952

« Last Edit: January 08, 2021, 02:36:57 PM by rkbabang »

rkbabang

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Re: Cryptocurrencies
« Reply #1163 on: January 12, 2021, 03:27:46 PM »
"a decade ago he was given 7,002 bitcoins as a reward for making a video explaining how the cryptocurrency works... the contents of his wallet are valued at $240m. But Thomas has forgotten the password that will unlock his fortune. Thomas has already entered the wrong password eight times, and if he guesses wrong two more times his hard drive, which contains his private keys to the bitcoin, will be encrypted – and he’ll never see the money"

https://www.theguardian.com/technology/2021/jan/12/in-bits-the-programmer-locked-out-of-his-130m-bitcoin-account

beerbaron

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Re: Cryptocurrencies
« Reply #1164 on: January 12, 2021, 05:31:04 PM »
"a decade ago he was given 7,002 bitcoins as a reward for making a video explaining how the cryptocurrency works... the contents of his wallet are valued at $240m. But Thomas has forgotten the password that will unlock his fortune. Thomas has already entered the wrong password eight times, and if he guesses wrong two more times his hard drive, which contains his private keys to the bitcoin, will be encrypted – and he’ll never see the money"

https://www.theguardian.com/technology/2021/jan/12/in-bits-the-programmer-locked-out-of-his-130m-bitcoin-account

That is a bit of BS, if could setup a mirror of the drive and try again and again. Painfully long but for 240M I'm sure he could even give it to a firm that would do it for him. That is especially true if the password is somewhat short 12 characters of less.

BeerBaron

clutch

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Re: Cryptocurrencies
« Reply #1165 on: January 12, 2021, 05:31:37 PM »
20 years from now, people will scavenge for encrypted hardwares that contain BTC private keys... just like deep sea treasure hunting :-)

NewbieD

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Re: Cryptocurrencies
« Reply #1166 on: January 13, 2021, 05:26:13 AM »
20 years from now, people will scavenge for encrypted hardwares that contain BTC private keys... just like deep sea treasure hunting :-)

20 years from now BTC security will be long since broken by quantum computing.

SnarkyPuppy

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Re: Cryptocurrencies
« Reply #1167 on: January 13, 2021, 09:23:57 AM »
20 years from now, people will scavenge for encrypted hardwares that contain BTC private keys... just like deep sea treasure hunting :-)

20 years from now BTC security will be long since broken by quantum computing.

Are you not similarly worried about your bank account or brokerage account?

pau_

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Re: Cryptocurrencies
« Reply #1168 on: January 13, 2021, 10:10:40 AM »

That is a bit of BS, if could setup a mirror of the drive and try again and again. Painfully long but for 240M I'm sure he could even give it to a firm that would do it for him. That is especially true if the password is somewhat short 12 characters of less.

BeerBaron

My guess is that this cannot be done non-destructively with the IronKey drive or he would have done this already. I personally wouldn't start desoldering connections on an SSD that contains the private key to a fortune. So the best bet is to wait for someone to discover a firmware vulnerability in the device that lets him bypass the attempt counter, or to have an epiphany.

This story reminds me of a story in WIRED where a guy tries everything to recover 7.4 bitcoin locked on a purpose-made hardware wallet with an escalating pin-entry delay function (practically the same as a limit). https://www.wired.com/story/i-forgot-my-pin-an-epic-tale-of-losing-dollar30000-in-bitcoin/

pau_

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Re: Cryptocurrencies
« Reply #1169 on: January 13, 2021, 10:19:47 AM »
20 years from now, people will scavenge for encrypted hardwares that contain BTC private keys... just like deep sea treasure hunting :-)

20 years from now BTC security will be long since broken by quantum computing.

Are you not similarly worried about your bank account or brokerage account?

Quantum computing is a threat to encryption because currently many forms of encryption rely on the fact that it's fast for a computer to multiple two very large numbers together but not fast to factor large numbers. There is an algorithm that runs on quantum computers called Shor's algorithm for factoring numbers much faster. There's a whole lot of work (Post-quantum cryptography) on finding and implementing encryption that doesn't rely on factoring and therefore isn't vulnerable to fast factoring by quantum computers.

Google is already shipping and running post-quantum encryption in Chrome for a percentage of requests. https://security.googleblog.com/2016/07/experimenting-with-post-quantum.html

As for bitcoin I imagine there are plans to upgrade to prevent quantum computing attacks (via a fork maybe?), but I don't really follow bitcoin closely so I don't know what the proposals are.