T Nation

Cryptocurrencies


#241

#242

I’ve read people saying the same thing for Christmas here in the U.S. during that dip in Dec.

My gut feeling is that I don’t buy it. I don’t get why people would take that much money out of their cryptocurrency wallets if they bought because of FOMO. I’m sure people bought crypto with their life savings and such and need to pull the money out, but to this extent?

I don’t get why the market will drop so much to what should be a very predictable event.

Also- The Cryptocurrency Reddit thread is fascinating. Either many of them are experts in finance and wall street magic, or they drank the kool-aid and are screaming “HODL”, as if it means anything, with their dying breath.

Not sure.


#243

I didn’t say this is the only reason. It’s a combination of multiple factors. A large drop in volume is one of them.

Most people are just parrots lol. I go there for news updates while trying to avoid reading their opinions.

However, HODLing is the right thing to do if one is an investor and not a trader. I’m not sure there’s a better strategy unless it’s a one off gamble.


#244

I was watching some youtubes on a couple of securities and was cracking up. Guys talking about resistance and support on half hour candlesticks and making lines all over the place on a time period of a couple of hours. I’m no genyis but I know enough to know that they don’t.

An old buddy of mine calls that “trying to catch a falling knife”.


#245

These guys… if they were really good at this shit, they would not be earning youtube money!

TA works pretty well with crypto actually, probably because it is still a relatively small market and there are lots of amateur traders all relying on the same signals. But it’s still not completely reliable. I don’t accumulate or set sell orders at multiple levels because I like earning less money lol.

Yeah even if someone has the guts to scalp, who’s really got the time and energy to do that?


#246

Anyone buying? :slightly_smiling_face:

I took out 2x my original investment a while back, thinking about throwing back in some of that profits…


#247

I’ve been buying back in small amounts. I think BTC may still have another leg down. Major support at 7500 and 5600 on my chart.


#248

What are the functional advantages of bitcoin as a currency?
It has a built in transaction fee to be paid to miners, so it doesn’t eliminate transaction fees. Moreover, the need for intermediaries has not been eliminated. They are just now called miners instead of banks.
While the blockshain itself is anonymous, economic activity in the real world still requires physical presence and addresses. The anonymity is really only conferred for transactions that are fully online and involve the purchase and sale of digital goods. Even then, the transaction is only as secure and anonymous as your internet connection (ie. not very unless you put effort into it).
While the blockchain itself is secure, wallet keys themselves are generally not as secure which leads to large amounts of theft and loss. The immutability of the blockchain leaves little recourse against these thefts and loss. To me, this is the biggest problem. In order for bitcoin to go mainstream as a form of payment, most people are going to need/want intermediaries to manage their wallets and take care of the liability. The blockchain will be abstracted out for most users. And the overhead of the cost of mining will be an added drain without actual added benefit.

So why does bitcoin have a longterm future other than as a bubble?


#249

It’s a gateway drug.


#250

Your understanding of BTC is equivalent to my 82 y/o grandmas.


#251

Okay. So answer the question.


#252

Much of your first post expresses very valid concerns. The general hope is that the positives of the currency will outweigh the negatives.

As for the transaction fees, I believe the current thinking is that long term it will never come close to the level of inflation we see out of fiats literally printing more money because they feel like it.

Why it has a long-term future is the same as any other currency. Because society says so (the decentralized part helps too, people like options that don’t allow for the govt to fuck with stuff as much). Enough big guys have gotten involved to the tune that cryptos as a concept are probably here to stay. It’s just which ones will survive the gauntlet that’s the real question these days.


#253

Secure – The system itself is secure. Unlike fiat which can be physically stolen, replicated, etc.

limited in supply – Like Gold and Silver, it is scarce, Bitcoin is limited to 21,000,000 coins. Fiat is not limited. Ask the children of Zimbabwe who are holding 100 Trillion dollar bills.

Easily and quickly transferrable –

Inexpensive to transfer. See Ripple and Wstern Union/Money Gram. Also, wire transfers require the digital transfer of money from financial institution to financial institution repeated 10 times.

Yes, this is where the security comes from. Unlike fiat, where the ledger is controlled by banks/government, this is held by the collective people.

No, but it’s exceptionally cheaper to transfer crypto to an Ethiopian prince than moneygram. BTC is expensive and slow, that’s why it’s had child chains. See BitGold and Bitcoin Cash.
https://bitcoingold.org/

Yes, this is the whole goal. Read about Proof of Stake (POS) and Proof of Work (POW). The collective controls the ledger, without individual control.

So it’s more secure/anonymous than fiat? cool.

See BitcoinPrivate, Verge, etc.
https://btcprivate.org/
https://vergecurrency.com/

How much experience do you have with wallet keys? My guess is ZERO.

Yawn… see ‘soft’ and ‘hard’ forks. Also, read up on blockchains and hashing. If, for instance, someone was able to de-hash the chain, they would only be able to undo one block. A fork could occur resetting the chain again.

You mean for 82 y/o grandmas and 90+ year old hedge fund managers (Charlie Munger)?

How much have you really spent learning, not reading, about blockchain and bitcoin? I assume none.

Since computer’s inception, the goal has been computation power. Blockchain does the opposite. It does rudimentary function extremely quickly, via smart contracts. It’s disruptive technology. But please, continue reading your NYT opinion pieces. The longer mainstream stays away the more I’ll own before it really bubbles.

And, no. The ~$8,500 price isn’t the bubble bursting. It’s an overcorrection to where BTC was in November.

EDIT: if I come across as an ass, it’s cause I’m sitting in a repetitive, stupid friday afternoon meeting, while I look outside at the first nice and warm day of year.


#254

So why has so much cryptocurrency been stolen?

Deflation makes people not want to buy things. Paradoxically, this means that as bitcoin becomes more adopted, the natural deflation will make it a good investment and a bad currency. Which will make it a bad investment.

So is money.

For domestic business, money transfer fees are basically negligible. This is only an issue for international transfers.

This is a subjective judgment based on whom you trust more.

Once again, really only an issue internationally.

I have read about those. Stating that they are the whole goal doesn’t explain why they are desirable. You’re just begging the question.

Depends entirely on the transaction. Physical cash is quite anonymous. My point is that in either case, anonymity or lack thereof usually depends less on the means of payment and more on other factors.

I’ll take a look.

You guessed wrong, but what is your point? I’m completely correct that my bitcoin account is only as secure as my private key. Wallet keys are easier to hack than the ledger, which was my point.

So Mt. Gox didn’t happen? Why didn’t they just fork the chain? Note, I’m not worried about someone de-hashing the chain. It’s mainly all of the other insecurities around exchanges and wallets that leave a problem.

My point is that if someone steals my credit card and I can go to the bank and cancel it. As long as I take reasonable steps, my liability is 0. If someone steals my wallet key, or hacks the exchange I am using, my liability is everything in my wallet. And there is no bank to go to to cancel my credit card.

Yes, them. And the 99% of people who just really don’t want to be bothered to actually understand the Blockchain, hashing, wallet keys, and how not to get ripped off using cryptocurrency.

If you expect these people to ever use bitcoin for everyday transactions, then you will have to abstract it out. It will end up looking pretty similar to the current financial system. The people doing the abstracting might not be called banks, but they will essentially be performing the same function.

Reading doesn’t count as learning? You think that in order to learn about something I have to have put real money on the line? Or what do you consider real “learning”? In any case, I have done more than reading.

Actually, rudimentary functions performed extremely quickly is all that computers have ever done. Computing power is just doing them faster and faster.

I don’t disagree that blockchain technology has a lot of useful applications. I just don’t think that currency for everyday transactions is actually one of them.

So you think it’s a bubble or you don’t?

Entirely possible. Bitcoin may maintain reasonable value indefinitely. It might even become a useful currency. But it will simply be by the fiat of enough people with enough money to make it happen, and not because of inherent benefits of the currency.


#255

The people are the vulnerable part. Same as anything. The system is rock solid.

These days, most importantly, bitcoin is the method to obtain the vast majority of altcoins as well.

Money transfer speed and ease doesn’t come close to touching cryptos. It almost feels biased to even evaluate them together on that metric.

Personally I think all cryptos are a bubble. But that’s mostly due to my cynical view of the world and govts and very little to do with the actual system.


#256

In the case of Mt. Gox and others, crypto was stolen from companies that held the funds in exchanges.

Why do you believe it will deflate? Cryptocurrency is digital gold, in a sense. A precious metal that can be easily transferred.

Not entirely. Transfers are very quick using crypto.

I think many people would trust the many more than a single institution.

Cryptos are much quicker for transferring.

It’s desirable because the security of the network cannot exist without miners, miners would not exist if there wasn’t a compensatory reason. PoS and PoW are the methodology for how this works. Nick Szabo has very interesting thoughts on this that are worth looking into.

How do you transfer cash without giving up your anonymity? Unless you wear a ski mask to pay for your morning coffee.

That’s correct. If you’re comparing a wallet to the blockchain, yes it’s not as secure. if you compare your digital wallet to a physical wallet or other forms of storing money, then you’d be incorrect.

I suspect that will change in the near future.

I don’t like to make absolute statements. I agree, in the short term, people will not be using crypto for every-day run of the mill purchases. Initially, it makes more sense for large transfers of funds, international, etc. The use of the technology is too new to place arbitrary limits.

Reading about crypto is easy. Open the paper. Learning about crypto would require actually understanding the technology, how it works, uses, etc.

Give it some time. I think it actually makes a ton of sense in third world countries where fiat currency isn’t as stable. i think @dt79 would agree.

No, I don’t think crypto is a bubble. I think it is going through a market correction. I think once Robin Hood and other mobile apps make it extremely easy to purchase coins, that it may take off ‘to the moon’ as kids say… I think the term bubble has taken on too many connotations.

I don’t think people are afraid of bitcoin becoming stable. It was created to be decentralized. Obviously, I’m in for the haul to make money as more adopters come on board. But yes, one day it will, most likely, be stable.

On my phone: I’m sure this is just riddled with typos.


#257

That’s basically my point. The blockchain ledger is like an unpickable lock on your front door. It doesn’t fix the fact that someone can kick your door down, drill a hole through your wall, break your windows, or just come in while the door is unlocked.

Of course, all things being equal, a better lock is better. But the cost of the better lock is the removal of the central authority. No central authority means you have no recourse when you get ripped off. For most people, that isn’t a good trade.

LOL. That doesn’t make my feel like it isn’t a bubble. Just that it has mini-bubbles propping it up.

Perhaps. But for most transactions, money transfer speed is fast enough. And when it isn’t, its more a case of the bank being an asshole rather than technical limitations of the technology. I don’t regularly come across situations where being able to transfer money faster would ease my life.

Cryptos are certainly a bubble. The real question is if all fiat currency is basically a bubble.


#258

To the contrary. Unhackable versions exist. Blockchain is essentially the presidential limo. We can’t stop you from leaving the doors unlocked, but if you choose to take the precautions, avenues exist.

Imo that’s going to be more of an early concern than a future concern. The learning curve for this stuff is fairly steep. Also the level of greed we saw made people very easy targets.

You realize you’re describing the status of USD within the global economy as well, right?

A lot of it (imo) started from a general lack of trust in the govt. We’ve seen plenty of countries literally steal money out of its citizens bank accounts and far worse economically throughout the years. To me this just feels like hedging against a potential tyrant.

Depends on what you mean by bubble. To me, a bubble is easily (relatively) popped. I certainly don’t see that as being the case with fiat, and given the players involved in BTC, I don’t see it as an issue with cryptos either (although obv fiat being more stable).


#259

Whether it is truly unhackable is debatable, but that isn’t really the point. The learning curve is very steep. Banks exist because most people don’t want to be responsible and liable for the intricacies of protecting their money from thieves and robbers.

The only way the learning curve gets shallower is if banks (or their successors) decide to abstract out the blockchain. Once that happens, the advantages of crypto are also abstracted out.

Except that the USD can be used to buy food and clothing and pay my mortgage and electric bill and buy new cars and pay other people to work for me because they want to buy food and clothing and pay their mortgage etc. USD can also be used to speculate in other currencies, just like bitcoin. But bitcoin can’t do those other things except for maybe buy a pizza from dominoes.

But using bitcoin requires a free internet and a government that at least tolerates it. If the government wants, it will tax it.

I don’t suspect it will go away completely.


#260

Agreed. I believe eventually cryptos will work the same way to a certain degree.

There are already services doing that.

Yup. So far anyway. Seeing as how it really only gained widespread attention like a year ago that doesn’t seem too worrisome to me. I’m not expecting any kind of crypto wave to happen overnight. Probably over a decade or so most of it will go down.

Due to the structure of btc, a forced taxation on anything other than capital gains would require a pretty big collapse of the govt in an authoritarian fashion. If the govt reaches that point, it won’t really matter how your currency is stored.

Me either. Now that China and Russia are both heavily involved it’s only a matter of time before the countries that aren’t involved are forced, whether behind closed doors or not. It’s just too much power to truly let go decentralized and “pure.” We’ve seen widescale manipulation attempts already. Eventually it’ll be on the scale of govts.