Interesting ride so far - Crypto-curriencies

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Malinois000
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Interesting ride so far - Crypto-curriencies

Post by Malinois000 » Wed Nov 22, 2017 8:33 am

I'm a staunch Dividend Growth Investor but decided in August to place 3.5% of my aftertax investment fund allocation into Crypto-currencies. My mix is 78.1% Bitcoin; 2.3% Bitcoin-Gold (hardfork) and 19.1% Ethereum. My original investment has increased 69.7% since the August 2017 entry date. Quite the roller coaster but I have never been more engaged in my investments in my life. I'm sure there are many on this forum that wouldn't touch a cryptocurrency with a ten-foot pole...I understand, but this may not be a bubble - it may be an S-curve? Time will tell. Anyway, I think it was well worth the calculated risk.

Thoughts?

livesoft
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Re: Interesting ride so far - Crypto-curriencies

Post by livesoft » Wed Nov 22, 2017 8:48 am

Sell! Sell! Sell!
This signature message sponsored by sscritic: Learn to fish.

terran
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Re: Interesting ride so far - Crypto-curriencies

Post by terran » Wed Nov 22, 2017 8:52 am

I'm pretty sure
Malinois000 wrote:
Wed Nov 22, 2017 8:33 am
... I have never been more engaged in my investments in my life...
would not be considered a benefit by most on this forum.

Malinois000
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Re: Interesting ride so far - Crypto-curriencies

Post by Malinois000 » Wed Nov 22, 2017 9:11 am

livesoft wrote:
Wed Nov 22, 2017 8:48 am
Sell! Sell! Sell!
No sir! There is a lot more money to be made!

chevca
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Re: Interesting ride so far - Crypto-curriencies

Post by chevca » Wed Nov 22, 2017 9:44 am

Then why have such a small percentage of your investments in it? :wink:

2pedals
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Re: Interesting ride so far - Crypto-curriencies

Post by 2pedals » Wed Nov 22, 2017 9:57 am

I see the word here used as an "investment". Holding cryto-curriencies is not an "investment", it is "speculation". I believe it is dangerous to confuse the two. Do not confuse speculation with investments and not change your investment plan, it could be harmful to your future.
Last edited by 2pedals on Wed Nov 22, 2017 10:08 am, edited 1 time in total.

Valuethinker
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Re: Interesting ride so far - Crypto-curriencies

Post by Valuethinker » Wed Nov 22, 2017 9:57 am

Malinois000 wrote:
Wed Nov 22, 2017 8:33 am
I'm a staunch Dividend Growth Investor but decided in August to place 3.5% of my aftertax investment fund allocation into Crypto-currencies. My mix is 78.1% Bitcoin; 2.3% Bitcoin-Gold (hardfork) and 19.1% Ethereum. My original investment has increased 69.7% since the August 2017 entry date. Quite the roller coaster but I have never been more engaged in my investments in my life. I'm sure there are many on this forum that wouldn't touch a cryptocurrency with a ten-foot pole...I understand, but this may not be a bubble - it may be an S-curve? Time will tell. Anyway, I think it was well worth the calculated risk.

Thoughts?
Read The Undoing Project. Also "Why Smart People Make Big Money Mistakes" by Thomas Gilovich. Also the books by James Montier on Behavioural Finance.

You are gambling. Ok there's no "house" out there to take its cut (is there?) but you are gambling, not investing.

Malinois000
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Re: Interesting ride so far - Crypto-curriencies

Post by Malinois000 » Wed Nov 22, 2017 10:05 am

chevca wrote:
Wed Nov 22, 2017 9:44 am
Then why have such a small percentage of your investments in it? :wink:
Good question - in hindsight I should have invested much more. The small percentage is still a decent amount. I wanted to invest an amount that if it is a bubble the disappears I wouldn't beat myself up for the next 10 years.

I do think digital currencies and especially blockchain technology is a game changing breakthrough and I refused to sit on the sidelines and not participate. As I said: time will tell, but I think those that rule it out completely may regret that position one day.

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jadd806
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Re: Interesting ride so far - Crypto-curriencies

Post by jadd806 » Wed Nov 22, 2017 10:06 am

Malinois000 wrote:
Wed Nov 22, 2017 9:11 am
livesoft wrote:
Wed Nov 22, 2017 8:48 am
Sell! Sell! Sell!
No sir! There is a lot more money to be made!
Why ask for others' input if you've already made a decision?

Accrual
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Re: Interesting ride so far - Crypto-curriencies

Post by Accrual » Wed Nov 22, 2017 10:08 am

jadd806 wrote:
Wed Nov 22, 2017 10:06 am
Malinois000 wrote:
Wed Nov 22, 2017 9:11 am
livesoft wrote:
Wed Nov 22, 2017 8:48 am
Sell! Sell! Sell!
No sir! There is a lot more money to be made!
Why ask for others' input if you've already made a decision?
I agree. What is the purpose of this post?

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Tycoon
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Re: Interesting ride so far - Crypto-curriencies

Post by Tycoon » Wed Nov 22, 2017 10:09 am

My only thoughts are:

This will not end well.
I hope you are young.

Good luck.
...I might be just beginning | I might be near the end. Enya | | C'est la vie

chevca
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Re: Interesting ride so far - Crypto-curriencies

Post by chevca » Wed Nov 22, 2017 10:11 am

Malinois000 wrote:
Wed Nov 22, 2017 10:05 am
chevca wrote:
Wed Nov 22, 2017 9:44 am
Then why have such a small percentage of your investments in it? :wink:
Good question - in hindsight I should have invested much more. The small percentage is still a decent amount. I wanted to invest an amount that if it is a bubble the disappears I wouldn't beat myself up for the next 10 years.

I do think digital currencies and especially blockchain technology is a game changing breakthrough and I refused to sit on the sidelines and not participate. As I said: time will tell, but I think those that rule it out completely may regret that position one day.
Personally, I won't regret it for a second if time comes to show that. Far to much speculation, risk, and unknowns in it for me.

If it works out well for you and others, I'll be happy for you. If it doesn't, I'll still be happy for you. :happy

Malinois000
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Re: Interesting ride so far - Crypto-curriencies

Post by Malinois000 » Wed Nov 22, 2017 10:13 am

jadd806 wrote:
Wed Nov 22, 2017 10:06 am
Malinois000 wrote:
Wed Nov 22, 2017 9:11 am
livesoft wrote:
Wed Nov 22, 2017 8:48 am
Sell! Sell! Sell!
No sir! There is a lot more money to be made!
Why ask for others' input if you've already made a decision?
I'm interested in others' input but not selling three months after making a decision to invest. As I referenced, I'm a long time dividend growth investor...never been much of a trader but I am interested in the BH groups feedback although I expected to receive a bit of a non supportive response.

finite_difference
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Re: Interesting ride so far - Crypto-curriencies

Post by finite_difference » Wed Nov 22, 2017 10:14 am

Malinois000 wrote:
Wed Nov 22, 2017 9:11 am
livesoft wrote:
Wed Nov 22, 2017 8:48 am
Sell! Sell! Sell!
No sir! There is a lot more money to be made!
Cryptocurrencies are extremely risky. As long as you are prepared to lose it all, and do not depend on this money for anything, and have a stomach of steel, then proceed — with caution.

I think cryptocurrencies are very cool and I do think they have a future, but they make buying penny stocks look like a safe and comfortable investment. :) I also don’t think there will be a market for hundreds of different types — I think the ones that will last are the ones that prove themselves to be the most secure and efficient over time, and I’m not even sure if crypto experts can predict that with certainty. One bug and your entire currency risks evaporating.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

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jadd806
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Re: Interesting ride so far - Crypto-curriencies

Post by jadd806 » Wed Nov 22, 2017 10:28 am

Malinois000 wrote:
Wed Nov 22, 2017 10:05 am
I do think digital currencies and especially blockchain technology is a game changing breakthrough and I refused to sit on the sidelines and not participate. As I said: time will tell, but I think those that rule it out completely may regret that position one day.
But does an investment in a cryptocurrency like Bitcoin really represent an investment in the underlying blockchain technology?

It is reminiscent of the late 90's tech stock bubble. People recognized the Internet as a game changer, and consequently pumped worthless "paper companies" like Pets.com up to insane valuations.

Companies who find value in blockchain can and will develop their own tech when they are ready. They don't need to use Bitcoin, Ethereum, or any of the thousands of other cryptocurrencies out there. The minute Goldman Sachs develops "GScoin" or something for their own internal use, the crypto market will crater.

Malinois000
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Re: Interesting ride so far - Crypto-curriencies

Post by Malinois000 » Wed Nov 22, 2017 10:39 am

jadd806 wrote:
Wed Nov 22, 2017 10:28 am
Malinois000 wrote:
Wed Nov 22, 2017 10:05 am
I do think digital currencies and especially blockchain technology is a game changing breakthrough and I refused to sit on the sidelines and not participate. As I said: time will tell, but I think those that rule it out completely may regret that position one day.
But does an investment in a cryptocurrency like Bitcoin really represent an investment in the underlying blockchain technology?

It is reminiscent of the late 90's tech stock bubble. People recognized the Internet as a game changer, and consequently pumped worthless "paper companies" like Pets.com up to insane valuations.

Companies who find value in blockchain can and will develop their own tech when they are ready. They don't need to use Bitcoin, Ethereum, or any of the thousands of other cryptocurrencies out there. The minute Goldman Sachs develops "GScoin" or something for their own internal use, the crypto market will crater.
That's what the banks are saying but if you don't have the cryptocurrency you don't have a "decentralized" ledger. That's the linkage...if you have a centralized ledger there is nothing groundbreaking about that. Last month I also took a position in IBM as they are going all in with blockchain technology and they pay a nice dividend so I saw that I as play that worked well with the rest of portfolio but also touched upon the blockchain.

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Re: Interesting ride so far - Crypto-curriencies

Post by grayfox » Wed Nov 22, 2017 10:48 am

Malinois000 wrote:
Wed Nov 22, 2017 8:33 am
I'm a staunch Dividend Growth Investor but decided in August to place 3.5% of my aftertax investment fund allocation into Crypto-currencies. My mix is 78.1% Bitcoin; 2.3% Bitcoin-Gold (hardfork) and 19.1% Ethereum. My original investment has increased 69.7% since the August 2017 entry date. Quite the roller coaster but I have never been more engaged in my investments in my life. I'm sure there are many on this forum that wouldn't touch a cryptocurrency with a ten-foot pole...I understand, but this may not be a bubble - it may be an S-curve? Time will tell. Anyway, I think it was well worth the calculated risk.

Thoughts?
I have a question for you: Have you ever paid for anything using bitcoin or another cryptocurrency?
Gott mit uns.

ThePrince
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Re: Interesting ride so far - Crypto-curriencies

Post by ThePrince » Wed Nov 22, 2017 11:04 am

grayfox wrote:
Wed Nov 22, 2017 10:48 am
Malinois000 wrote:
Wed Nov 22, 2017 8:33 am
I'm a staunch Dividend Growth Investor but decided in August to place 3.5% of my aftertax investment fund allocation into Crypto-currencies. My mix is 78.1% Bitcoin; 2.3% Bitcoin-Gold (hardfork) and 19.1% Ethereum. My original investment has increased 69.7% since the August 2017 entry date. Quite the roller coaster but I have never been more engaged in my investments in my life. I'm sure there are many on this forum that wouldn't touch a cryptocurrency with a ten-foot pole...I understand, but this may not be a bubble - it may be an S-curve? Time will tell. Anyway, I think it was well worth the calculated risk.

Thoughts?
I have a question for you: Have you ever paid for anything using bitcoin or another cryptocurrency?
+1

queso
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Re: Interesting ride so far - Crypto-curriencies

Post by queso » Wed Nov 22, 2017 11:08 am

Interesting ride for sure. I'm holding Bitcoin, Bitcoin Gold, Ethereum and Litecoin. Like you, I am up a LOT from my initial position and a LOT when compared to my other investments (mostly VTSAX, VTIAX, VBTLX, AAPL). However, I am not delusional about it. Do I wish I would have cashed out of everything and thrown it into crypto when I made my original investment.. Absolutely! What if it quintuples from here? Oh man, I should cash out and do that now. Wait, what if it crashes or becomes illegal and I lose it all? But I can't miss out if it goes to $50000. OMG.

See how this works? :happy

Be happy you made a couple bucks. I am. It's fun money and I don't plan to cash out, but it doesn't affect my FIRE numbers if it goes to zero. It's not an investment.

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jadd806
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Re: Interesting ride so far - Crypto-curriencies

Post by jadd806 » Wed Nov 22, 2017 11:13 am

Malinois000 wrote:
Wed Nov 22, 2017 10:39 am
jadd806 wrote:
Wed Nov 22, 2017 10:28 am
Malinois000 wrote:
Wed Nov 22, 2017 10:05 am
I do think digital currencies and especially blockchain technology is a game changing breakthrough and I refused to sit on the sidelines and not participate. As I said: time will tell, but I think those that rule it out completely may regret that position one day.
But does an investment in a cryptocurrency like Bitcoin really represent an investment in the underlying blockchain technology?

It is reminiscent of the late 90's tech stock bubble. People recognized the Internet as a game changer, and consequently pumped worthless "paper companies" like Pets.com up to insane valuations.

Companies who find value in blockchain can and will develop their own tech when they are ready. They don't need to use Bitcoin, Ethereum, or any of the thousands of other cryptocurrencies out there. The minute Goldman Sachs develops "GScoin" or something for their own internal use, the crypto market will crater.
That's what the banks are saying but if you don't have the cryptocurrency you don't have a "decentralized" ledger. That's the linkage...if you have a centralized ledger there is nothing groundbreaking about that. Last month I also took a position in IBM as they are going all in with blockchain technology and they pay a nice dividend so I saw that I as play that worked well with the rest of portfolio but also touched upon the blockchain.
You don't need a cryptocurrency to create a decentralized ledger. You do need user incentives to encourage network participation, but there is no reason why those incentives have to come in the form of a digital token.

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Kenkat
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Re: Interesting ride so far - Crypto-curriencies

Post by Kenkat » Wed Nov 22, 2017 11:14 am

My older son started experimenting with mining Bitcoin with his gaming PC when it was $10. That was up substantially from under one dollar just a few months before.

Do I wish I had dumped real money into at that price? Yes. BUT - it was very unclear at that time that things would unfold as they have.

It is very similar to wishing I had bought Amazon or Google at the beginning. However, again, at that time, who knew what would happen in the future.

Bitcoin feels very “bubbly” to me right now, but I probably would have said that when it hit $100 or $500 or $1000, but yet it keeps going up. Who knows what the peak will be?

I would consider your investment in crypto currencies to extremely high risk, and I would be prepared to lose a substantial portion of it. However, if you are ok with that, you never know what might happen. There will always be naysayers and they will honestly usually be right. But sometimes they’re not.

Joe_R95
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Re: Interesting ride so far - Crypto-curriencies

Post by Joe_R95 » Thu Nov 23, 2017 9:47 am

Sounds like you could cash out the majority of your initial investment, and let the rest roll knowing if it is a bubble you haven't lost anything. Whatever your thoughts on rebalancing are, a 69.7% increase in 3.5% of your portfolio probably has your allocation out of whack.

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Re: Interesting ride so far - Crypto-curriencies

Post by rmelvey » Thu Nov 23, 2017 10:02 am

I love this forum, but it's not a good place to discuss cryptocurrencies unfortunately. You would never own cryptocurrencies if you listened to the consensus here, so I don't think asking this forum for advice on it is going to bear much fruit.

I am personally a big believer in crypto currencies and have over half of my portfolio allocated now (recently made a substantial purchase at $7100 for BTC and $300 for ETH) with the remainder in US equities. It's a very interesting time in the space because a lot of financial professionals are getting involved and building up their positions, before their institutional/client money gets invested of course :wink: . People have been looking for a genuine alternative investment for a long time (low correlation with stocks/bonds but with high returns) and crypto fits the bill. It is a very powerful asset in a CAPM style portfolio.

You also need to keep in mind demographics with crypto. It is far more popular with younger generations (who control the least amount of wealth). As their income grows and as they inevitably inherit more wealth I think a greater % of the global asset allocation will shift over to cryptocurrencies.

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Re: Interesting ride so far - Crypto-curriencies

Post by Peculiar_Investor » Thu Nov 23, 2017 10:24 am

In addition to the cautions others have offered, I'll offer this. I'm a follower of the foundation provided by Ben Graham who began his classic book, The Intelligent Investor, in Chapter 1 with
Ben Graham wrote:An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.
Without a doubt I'd classify this under "speculation" rather than investing and therefore I'd have no interest in this area.
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OldSport
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Re: Interesting ride so far - Crypto-curriencies

Post by OldSport » Thu Nov 23, 2017 11:47 am

How do you even invest, er speculate, in Bitcoin or Litcoin? That is without paying expensive "miners fees" or other transaction fees that make it far worse than mere speculation.

Is there a way to Invest/speculate in the Blockchain technology companies?

I allocate 2-3% of my portfolio for speculation "fun money" that I don't count on. So far the fun money has done great on average, but it is so much more volatile, so I limit to 2-3%. E.g. one stock is up 5x, but another lost 50% in one day after loosing a lawsuit, which was up 25% before that.

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Re: Interesting ride so far - Crypto-curriencies

Post by nisiprius » Thu Nov 23, 2017 12:18 pm

OldSport wrote:
Thu Nov 23, 2017 11:47 am
How do you even invest, er speculate, in Bitcoin or Litcoin? That is without paying expensive "miners fees" or other transaction fees that make it far worse than mere speculation.

Is there a way to Invest/speculate in the Blockchain technology companies?

I allocate 2-3% of my portfolio for speculation "fun money" that I don't count on. So far the fun money has done great on average, but it is so much more volatile, so I limit to 2-3%. E.g. one stock is up 5x, but another lost 50% in one day after loosing a lawsuit, which was up 25% before that.
In theory, if it existed, you could "invest in bitcoin" without needing to transact or mine bitcoin yourself by buying the Winklevoss twins' COIN ETF. It has a ticker symbol and all that.

However, it doesn't exist.

For about three years now, it has perpetually been in a state of "expecting final regulatory approval in a few months." The SEC rejected it in March, but then in April the SEC granted a petition to reconsider.

If it were to be approved, it would be an easy way to participate in the ups and downs of bitcoin's price movements without having to buy or sell bitcoin directly yourself. I won't say "easy, safe way" because I'm not sure how much the protections of the Investment Company Act of 1940 would protect you in a case like this, it would at least protect you from using a fraudulent exchange. It certainly sounds like a good answer if the only thing you care about is bitcoin's price movements, not bitcoin itself.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Jonathan
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Re: Interesting ride so far - Crypto-curriencies

Post by Jonathan » Thu Nov 23, 2017 9:23 pm

OldSport wrote:
Thu Nov 23, 2017 11:47 am
How do you even invest, er speculate, in Bitcoin or Litcoin? That is without paying expensive "miners fees" or other transaction fees that make it far worse than mere speculation.
Search Vanguard.com for "bitcoin". GBTC is fairly well-known: https://personal.vanguard.com/us/funds/ ... icker=GBTC

There is a varying premium for bitcoin when purchasing via GBTC, although some people prefer it anyway, both for ease of use and tax-advantaged treatment.

You can just buy bitcoin via Coinbase though; the fees are reasonable, and even more reasonable when transacting via their GDAX exchange.

Image

Malinois000
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Re: Interesting ride so far - Crypto-curriencies

Post by Malinois000 » Fri Nov 24, 2017 9:59 pm

rmelvey wrote:
Thu Nov 23, 2017 10:02 am
I love this forum, but it's not a good place to discuss cryptocurrencies unfortunately. You would never own cryptocurrencies if you listened to the consensus here, so I don't think asking this forum for advice on it is going to bear much fruit.

I am personally a big believer in crypto currencies and have over half of my portfolio allocated now (recently made a substantial purchase at $7100 for BTC and $300 for ETH) with the remainder in US equities. It's a very interesting time in the space because a lot of financial professionals are getting involved and building up their positions, before their institutional/client money gets invested of course :wink: . People have been looking for a genuine alternative investment for a long time (low correlation with stocks/bonds but with high returns) and crypto fits the bill. It is a very powerful asset in a CAPM style portfolio.

You also need to keep in mind demographics with crypto. It is far more popular with younger generations (who control the least amount of wealth). As their income grows and as they inevitably inherit more wealth I think a greater % of the global asset allocation will shift over to cryptocurrencies.
I agree with your comments as this is not the best forum to post my question. By the way, I'm a bit older than the typical crypto investor which is one of the reasons it's been such an interesting ride. It is completely out of my character. Thanks for your comments and good luck.

am
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Re: Interesting ride so far - Crypto-curriencies

Post by am » Sat Nov 25, 2017 3:18 pm

Can someone explain how these cryptocurrencies such as bitcoin will be used for everyday transactions when the price is extremely volatile, transactions slow and expensive, limited acceptance, complex to use for everyday people, potential restrictive regulations etc? How will these cryptocurrencies achieve widespread use? What will change in the near future and why has it not occurred in the last 5 yrs of existence? Why not just invest in the total market with the idea that any advances will be reflected in profits and share price?

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Re: Interesting ride so far - Crypto-curriencies

Post by bberris » Sat Nov 25, 2017 7:27 pm

am wrote:
Sat Nov 25, 2017 3:18 pm
Can someone explain how these cryptocurrencies such as bitcoin will be used for everyday transactions when the price is extremely volatile, transactions slow and expensive, limited acceptance, complex to use for everyday people, potential restrictive regulations etc? How will these cryptocurrencies achieve widespread use? What will change in the near future and why has it not occurred in the last 5 yrs of existence? Why not just invest in the total market with the idea that any advances will be reflected in profits and share price?
Why, it's the currency of the future. It always will be the currency of the future.

Malinois000
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Re: Interesting ride so far - Crypto-curriencies

Post by Malinois000 » Sat Nov 25, 2017 9:12 pm

am wrote:
Sat Nov 25, 2017 3:18 pm
Can someone explain how these cryptocurrencies such as bitcoin will be used for everyday transactions when the price is extremely volatile, transactions slow and expensive, limited acceptance, complex to use for everyday people, potential restrictive regulations etc? How will these cryptocurrencies achieve widespread use? What will change in the near future and why has it not occurred in the last 5 yrs of existence? Why not just invest in the total market with the idea that any advances will be reflected in profits and share price?
I have not spent, nor do I plan to, as I use it as a store of value - especially the Bitcoin. The appreciation has been like no investment I've had before so I have no plans to spend. HODL (Hold on for Dear Life) is my current plan.

am
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Re: Interesting ride so far - Crypto-curriencies

Post by am » Sat Nov 25, 2017 11:42 pm

Malinois000 wrote:
Sat Nov 25, 2017 9:12 pm
am wrote:
Sat Nov 25, 2017 3:18 pm
Can someone explain how these cryptocurrencies such as bitcoin will be used for everyday transactions when the price is extremely volatile, transactions slow and expensive, limited acceptance, complex to use for everyday people, potential restrictive regulations etc? How will these cryptocurrencies achieve widespread use? What will change in the near future and why has it not occurred in the last 5 yrs of existence? Why not just invest in the total market with the idea that any advances will be reflected in profits and share price?
I have not spent, nor do I plan to, as I use it as a store of value - especially the Bitcoin. The appreciation has been like no investment I've had before so I have no plans to spend. HODL (Hold on for Dear Life) is my current plan.
How could a store of value have no intrinsic value? I don’t see how it could be sustainable for the long term? The idea is exciting, but I am not sure how current cryptocurrencies can fill that function and what would make them gain more widespread use? Seems like they have been around long enough now, and the only use I have seen is speculation. Fear of missing out phenomenon. There are no readily available opportunities to actually use the currency for its intended purpose to everyday Joes. And I don’t see a benefit for most law abiding people over using credit credit cards? Please explain if I am missing something. Seems like we may as well be trading tulip bulbs like some have said.

Malinois000
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Re: Interesting ride so far - Crypto-curriencies

Post by Malinois000 » Sun Nov 26, 2017 7:54 am

am wrote:
Sat Nov 25, 2017 11:42 pm
Malinois000 wrote:
Sat Nov 25, 2017 9:12 pm
am wrote:
Sat Nov 25, 2017 3:18 pm
Can someone explain how these cryptocurrencies such as bitcoin will be used for everyday transactions when the price is extremely volatile, transactions slow and expensive, limited acceptance, complex to use for everyday people, potential restrictive regulations etc? How will these cryptocurrencies achieve widespread use? What will change in the near future and why has it not occurred in the last 5 yrs of existence? Why not just invest in the total market with the idea that any advances will be reflected in profits and share price?
I have not spent, nor do I plan to, as I use it as a store of value - especially the Bitcoin. The appreciation has been like no investment I've had before so I have no plans to spend. HODL (Hold on for Dear Life) is my current plan.
How could a store of value have no intrinsic value? I don’t see how it could be sustainable for the long term? The idea is exciting, but I am not sure how current cryptocurrencies can fill that function and what would make them gain more widespread use? Seems like they have been around long enough now, and the only use I have seen is speculation. Fear of missing out phenomenon. There are no readily available opportunities to actually use the currency for its intended purpose to everyday Joes. And I don’t see a benefit for most law abiding people over using credit credit cards? Please explain if I am missing something. Seems like we may as well be trading tulip bulbs like some have said.
I obviously think you are incorrect otherwise I wouldn't have invested. But perhaps you are right...time will tell. It just crossed the $9k threshold. I'm holding and we will see what happens...

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Re: Interesting ride so far - Crypto-curriencies

Post by Valuethinker » Sun Nov 26, 2017 8:06 am

Malinois000 wrote:
Wed Nov 22, 2017 8:33 am
I'm a staunch Dividend Growth Investor but decided in August to place 3.5% of my aftertax investment fund allocation into Crypto-currencies. My mix is 78.1% Bitcoin; 2.3% Bitcoin-Gold (hardfork) and 19.1% Ethereum. My original investment has increased 69.7% since the August 2017 entry date. Quite the roller coaster but I have never been more engaged in my investments in my life. I'm sure there are many on this forum that wouldn't touch a cryptocurrency with a ten-foot pole...I understand, but this may not be a bubble - it may be an S-curve? Time will tell. Anyway, I think it was well worth the calculated risk.

Thoughts?
The dividends you will receive from currency spinouts will more than pay for the cost of the investment.

In fact, since these currencies can split infinitely, your profits could go to infinity.

All you need are more buyers such as hedge funds and CME speculators.

I would encourage you to read up on Principal Agent Problem in economics, and from that you will concluded that this thing has no upper limit. Also note that real interest rates in China are negative, so it costs nothing for the Chinese to buy Bitcoin, in effect.

Valuethinker
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Re: Interesting ride so far - Crypto-curriencies

Post by Valuethinker » Sun Nov 26, 2017 8:10 am

am wrote:
Sat Nov 25, 2017 11:42 pm
Malinois000 wrote:
Sat Nov 25, 2017 9:12 pm
am wrote:
Sat Nov 25, 2017 3:18 pm
Can someone explain how these cryptocurrencies such as bitcoin will be used for everyday transactions when the price is extremely volatile, transactions slow and expensive, limited acceptance, complex to use for everyday people, potential restrictive regulations etc? How will these cryptocurrencies achieve widespread use? What will change in the near future and why has it not occurred in the last 5 yrs of existence? Why not just invest in the total market with the idea that any advances will be reflected in profits and share price?
I have not spent, nor do I plan to, as I use it as a store of value - especially the Bitcoin. The appreciation has been like no investment I've had before so I have no plans to spend. HODL (Hold on for Dear Life) is my current plan.
How could a store of value have no intrinsic value? I don’t see how it could be sustainable for the long term? The idea is exciting, but I am not sure how current cryptocurrencies can fill that function and what would make them gain more widespread use? Seems like they have been around long enough now, and the only use I have seen is speculation. Fear of missing out phenomenon. There are no readily available opportunities to actually use the currency for its intended purpose to everyday Joes. And I don’t see a benefit for most law abiding people over using credit credit cards? Please explain if I am missing something. Seems like we may as well be trading tulip bulbs like some have said.
You just do not understand the investment logic!

This thing is going to take over the world. It will replace conventional currencies in international financial transactions. Why would anyone want the interference of government? Hasn't recent political history taught you governments are obsolete? (especially if you can get New Zealand citizenship, like so many cyber-libertarians are).

The cost of money is, for the foreseeable future, negative (either in nominal terms eg Eurozone, or real terms e.g. Japan). Governments want inflation, and Central Banks will create inflation (look how successful they have been at this since 2008? Why underlying, true inflation must be 10-15% in most major currencies-- look at China).

And each cybercurrency can pay out a new cybercurrency as a dividend. That's why bitcoin is up in recent days (that, and the fact that derivatives will be available against it via the CME-- the CME is looking at a 30% Initial Margin i.e. for $1.00 I can buy $3.40 of bitcoin exposure). As these new buyers come in, the sky is the limit for these currencies. And more will always be created!

I would encourage you to ignore the below, because it's obvious this guy is just out of date, old fashioned, knows nothing about the financial markets of the future

https://www.marketwatch.com/story/wall- ... 2017-11-15

Valuethinker
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Re: Interesting ride so far - Crypto-curriencies

Post by Valuethinker » Sun Nov 26, 2017 8:32 am

It's really fortunate with cybercurrencies that, since there is no leverage, none of the steps below can take place.

https://www.investopedia.com/articles/s ... bubble.asp

Minsky's Theory of Financial Instability
The economist Hyman P. Minsky is certainly no household name. However, thanks to the credit crisis and recession of 2008-09, Minsky's theory of financial instability attracted a great deal of attention and gathered an increasing number of adherents more than a decade after his passing in 1996. Minsky was one of the first economist to explain the development of financial instability and its interaction with the economy. His book, "Stabilizing an Unstable Economy" (1986) was considered a pioneering work on this subject. (To learn more, refer to Riding The Market Bubble: Don't Try This At Home.)

Five Steps of a Bubble
Minsky identified five stages in a typical credit cycle – displacement, boom, euphoria, profit taking and panic. Although there are various interpretations of the cycle, the general pattern of bubble activity remains fairly consistent.

Displacement: A displacement occurs when investors get enamored by a new paradigm, such as an innovative new technology or interest rates that are historically low. A classic example of displacement is the decline in the federal funds rate from 6.5% in May, 2000, to 1% in June, 2003. Over this three-year period, the interest rate on 30-year fixed-rate mortgages fell by 2.5 percentage points to a historic lows of 5.21%, sowing the seeds for the housing bubble.
Boom: Prices rise slowly at first, following a displacement, but then gain momentum as more and more participants enter the market, setting the stage for the boom phase. During this phase, the asset in question attracts widespread media coverage. Fear of missing out on what could be an once-in-a-lifetime opportunity spurs more speculation, drawing an increasing number of participants into the fold.
Euphoria: During this phase,caution is thrown to the wind, as asset prices skyrocket. The "greater fool" theory plays out everywhere.
Valuations reach extreme levels during this phase. For example, at the peak of the Japanese real estate bubble in 1989, land in Tokyo sold for as much as $139,000 per square foot, or more than 350-times the value of Manhattan property. After the bubble burst, real estate lost approximately 80% of its inflated value, while stock prices declined by 70%. Similarly, at the height of the internet bubble in March, 2000, the combined value of all technology stocks on the Nasdaq was higher than the GDP of most nations.

During the euphoric phase, new valuation measures and metrics are touted to justify the relentless rise in asset prices.

Profit Taking: By this time, the smart money – heeding the warning signs – is generally selling out positions and taking profits. But estimating the exact time when a bubble is due to collapse can be a difficult exercise and extremely hazardous to one's financial health, because, as John Maynard Keynes put it, "the markets can stay irrational longer than you can stay solvent."
Note that it only takes a relatively minor event to prick a bubble, but once it is pricked, the bubble cannot "inflate" again. In August, 2007, for example, French bank BNP Paribas halted withdrawals from three investment funds with substantial exposure to U.S. subprime mortgages because it could not value their holdings. While this development initially rattled financial markets, it was brushed aside over the next couple months, as global equity markets reached new highs. In retrospect, this relatively minor event was indeed a warning sign of the turbulent times to come.

Panic: In the panic stage, asset prices reverse course and descend as rapidly as they had ascended. Investors and speculators, faced with margin calls and plunging values of their holdings, now want to liquidate them at any price. As supply overwhelms demand, asset prices slide sharply.
One of the most vivid examples of global panic in financial markets occurred in October 2008, weeks after Lehman Brothers declared bankruptcy and Fannie Mae, Freddie Mac and AIG almost collapsed. The S&P 500 plunged almost 17% that month, its ninth-worst monthly performance. In that single month, global equity markets lost a staggering $9.3 trillion of 22% of their combined market capitalization.


There is just no risk of this.

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corn18
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Re: Interesting ride so far - Crypto-curriencies

Post by corn18 » Sun Nov 26, 2017 9:07 am

ThePrince wrote:
Wed Nov 22, 2017 11:04 am
grayfox wrote:
Wed Nov 22, 2017 10:48 am
Malinois000 wrote:
Wed Nov 22, 2017 8:33 am
I'm a staunch Dividend Growth Investor but decided in August to place 3.5% of my aftertax investment fund allocation into Crypto-currencies. My mix is 78.1% Bitcoin; 2.3% Bitcoin-Gold (hardfork) and 19.1% Ethereum. My original investment has increased 69.7% since the August 2017 entry date. Quite the roller coaster but I have never been more engaged in my investments in my life. I'm sure there are many on this forum that wouldn't touch a cryptocurrency with a ten-foot pole...I understand, but this may not be a bubble - it may be an S-curve? Time will tell. Anyway, I think it was well worth the calculated risk.

Thoughts?
I have a question for you: Have you ever paid for anything using bitcoin or another cryptocurrency?
+1
+1

I have asked this question of everyone I can and have yet to meet or hear from anyone who has actually used crypto currency to buy something. Seems stupid to have a whole crypto currency craze and no one is actually using it. Maybe I hang out with the wrong crowd.

minimalistmarc
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Re: Interesting ride so far - Crypto-curriencies

Post by minimalistmarc » Sun Nov 26, 2017 9:47 am

Malinois000 wrote:
Wed Nov 22, 2017 10:05 am
chevca wrote:
Wed Nov 22, 2017 9:44 am
Then why have such a small percentage of your investments in it? :wink:
Good question - in hindsight I should have invested much more. The small percentage is still a decent amount. I wanted to invest an amount that if it is a bubble the disappears I wouldn't beat myself up for the next 10 years.

I do think digital currencies and especially blockchain technology is a game changing breakthrough and I refused to sit on the sidelines and not participate. As I said: time will tell, but I think those that rule it out completely may regret that position one day.
I’d rather hold blockchain companies at market weight in my index trackers.

chevca
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Re: Interesting ride so far - Crypto-curriencies

Post by chevca » Sun Nov 26, 2017 9:53 am

Valuethinker wrote:
Sun Nov 26, 2017 8:06 am
The dividends you will receive from currency spinouts will more than pay for the cost of the investment.

In fact, since these currencies can split infinitely, your profits could go to infinity.

All you need are more buyers such as hedge funds and CME speculators.
In one of these threads about bitcoin, someone asked how it's a Ponzi scheme. The above sure makes it sound like one to me.

Valuethinker
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Re: Interesting ride so far - Crypto-curriencies

Post by Valuethinker » Sun Nov 26, 2017 10:19 am

chevca wrote:
Sun Nov 26, 2017 9:53 am
Valuethinker wrote:
Sun Nov 26, 2017 8:06 am
The dividends you will receive from currency spinouts will more than pay for the cost of the investment.

In fact, since these currencies can split infinitely, your profits could go to infinity.

All you need are more buyers such as hedge funds and CME speculators.
In one of these threads about bitcoin, someone asked how it's a Ponzi scheme. The above sure makes it sound like one to me.
The internet was not a Ponzi scheme, was it?

Therefore this is not a Ponzi scheme.

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corn18
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Re: Interesting ride so far - Crypto-curriencies

Post by corn18 » Sun Nov 26, 2017 10:24 am

Valuethinker wrote:
Sun Nov 26, 2017 10:19 am
chevca wrote:
Sun Nov 26, 2017 9:53 am
Valuethinker wrote:
Sun Nov 26, 2017 8:06 am
The dividends you will receive from currency spinouts will more than pay for the cost of the investment.

In fact, since these currencies can split infinitely, your profits could go to infinity.

All you need are more buyers such as hedge funds and CME speculators.
In one of these threads about bitcoin, someone asked how it's a Ponzi scheme. The above sure makes it sound like one to me.
The internet was not a Ponzi scheme, was it?

Therefore this is not a Ponzi scheme.
Have internet profits gone to infinity?

chevca
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Re: Interesting ride so far - Crypto-curriencies

Post by chevca » Sun Nov 26, 2017 10:30 am

Valuethinker wrote:
Sun Nov 26, 2017 10:19 am
chevca wrote:
Sun Nov 26, 2017 9:53 am
Valuethinker wrote:
Sun Nov 26, 2017 8:06 am
The dividends you will receive from currency spinouts will more than pay for the cost of the investment.

In fact, since these currencies can split infinitely, your profits could go to infinity.

All you need are more buyers such as hedge funds and CME speculators.
In one of these threads about bitcoin, someone asked how it's a Ponzi scheme. The above sure makes it sound like one to me.
The internet was not a Ponzi scheme, was it?

Therefore this is not a Ponzi scheme.
Does the internet pay out dividends, and does the internet just need more buyers???

Strong argument you made there....

Jonathan
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Re: Interesting ride so far - Crypto-curriencies

Post by Jonathan » Sun Nov 26, 2017 11:09 am

If you're certain that bitcoin is a bubble or a Ponzi, you can short it. Coinbase is a mainstream, well-insured exchange that you can use to purchase a short. Then, if the value of bitcoin plummets, you'll profit significantly.

Have any bogleheads shorted bitcoin?

Malinois000
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Re: Interesting ride so far - Crypto-curriencies

Post by Malinois000 » Sun Nov 26, 2017 11:50 am

Jonathan wrote:
Sun Nov 26, 2017 11:09 am
If you're certain that bitcoin is a bubble or a Ponzi, you can short it. Coinbase is a mainstream, well-insured exchange that you can use to purchase a short. Then, if the value of bitcoin plummets, you'll profit significantly.

Have any bogleheads shorted bitcoin?
You can not short Bitcoin on Coinbase. You may be able to do so when the CME launches futures. Do so at your own risk, however, as the herd is just now getting ready to descend on Bitcoin...

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corn18
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Re: Interesting ride so far - Crypto-curriencies

Post by corn18 » Sun Nov 26, 2017 11:59 am

Jonathan wrote:
Sun Nov 26, 2017 11:09 am
Have any bogleheads shorted bitcoin?
Have any bogleheads used bitcoin?

Jonathan
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Re: Interesting ride so far - Crypto-curriencies

Post by Jonathan » Sun Nov 26, 2017 12:20 pm

corn18 wrote:
Sun Nov 26, 2017 11:59 am
Jonathan wrote:
Sun Nov 26, 2017 11:09 am
Have any bogleheads shorted bitcoin?
Have any bogleheads used bitcoin?
Yes, I have. For example, I've used it to make many purchases on Amazon, using Purse.io. Search my post history, I have a writeup on how this is done.

That's the biggest example. I've also made other misc small purchases. Of course, because of bitcoin's dramatic price rise, I've regretted each one!

oinkyboinky
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Re: Interesting ride so far - Crypto-curriencies

Post by oinkyboinky » Sun Nov 26, 2017 12:28 pm

2pedals wrote:
Wed Nov 22, 2017 9:57 am
I see the word here used as an "investment". Holding cryto-curriencies is not an "investment", it is "speculation". I believe it is dangerous to confuse the two. Do not confuse speculation with investments and not change your investment plan, it could be harmful to your future.
This is only true on particular conceptions of “investment” and “speculation” though, right?

For example, if we take an investment to mean purchasing an asset where there is a risk of its value going up or down, then cryptos can be called an investment.

What makes the conceptions of “investment” and “speculation” (under which cryptos are NOT investments), better than the one above?

Valuethinker
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Re: Interesting ride so far - Crypto-curriencies

Post by Valuethinker » Sun Nov 26, 2017 12:29 pm

chevca wrote:
Sun Nov 26, 2017 10:30 am
Valuethinker wrote:
Sun Nov 26, 2017 10:19 am
chevca wrote:
Sun Nov 26, 2017 9:53 am
Valuethinker wrote:
Sun Nov 26, 2017 8:06 am
The dividends you will receive from currency spinouts will more than pay for the cost of the investment.

In fact, since these currencies can split infinitely, your profits could go to infinity.

All you need are more buyers such as hedge funds and CME speculators.
In one of these threads about bitcoin, someone asked how it's a Ponzi scheme. The above sure makes it sound like one to me.
The internet was not a Ponzi scheme, was it?

Therefore this is not a Ponzi scheme.
Does the internet pay out dividends, and does the internet just need more buyers???

Strong argument you made there....
So bitcoin might be like the internet?

An interesting enabling technology, with commercial opportunities, but not in itself a viable investment?

An amazing thought and totally contrary to the starting theme of this thread ....

Valuethinker
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Re: Interesting ride so far - Crypto-curriencies

Post by Valuethinker » Sun Nov 26, 2017 12:30 pm

Malinois000 wrote:
Sun Nov 26, 2017 11:50 am
Jonathan wrote:
Sun Nov 26, 2017 11:09 am
If you're certain that bitcoin is a bubble or a Ponzi, you can short it. Coinbase is a mainstream, well-insured exchange that you can use to purchase a short. Then, if the value of bitcoin plummets, you'll profit significantly.

Have any bogleheads shorted bitcoin?
You can not short Bitcoin on Coinbase. You may be able to do so when the CME launches futures. Do so at your own risk, however, as the herd is just now getting ready to descend on Bitcoin...
And this is surely the most intelligent comment yet made (by anyone) on this thread.

i.e. the risks in shorting bitcoin.

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corn18
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Re: Interesting ride so far - Crypto-curriencies

Post by corn18 » Sun Nov 26, 2017 12:31 pm

Jonathan wrote:
Sun Nov 26, 2017 12:20 pm
corn18 wrote:
Sun Nov 26, 2017 11:59 am
Jonathan wrote:
Sun Nov 26, 2017 11:09 am
Have any bogleheads shorted bitcoin?
Have any bogleheads used bitcoin?
Yes, I have. For example, I've used it to make many purchases on Amazon, using Purse.io. Search my post history, I have a writeup on how this is done.

That's the biggest example. I've also made other misc small purchases. Of course, because of bitcoin's dramatic price rise, I've regretted each one!
Coolio. I assume you can spend bits of a bitcoin? If one bitcoin is worth $7000 and I want to buy something for $100, they just take a portion of my bitcoin?

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