How to Invest in Crypto like a Boglehead?

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watchnerd
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Re: How to Invest in Crypto like a Boglehead?

Post by watchnerd »

fingoals wrote: Sun Apr 25, 2021 4:10 pm
bck63 wrote: Sat Apr 24, 2021 9:49 am Crypto is nothing but fairy dust - a pump and dump scam. It's ones and zeros, nothing more.

Avoid it at all cost. Don't be the last guy caught holding the bag.
All software is ones and zeros. But somehow the relevant market size just for enterprise software is more than 500 billion dollars ...
I don't think that word means what you think it means.
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StevieG72
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Re: How to Invest in Crypto like a Boglehead?

Post by StevieG72 »

I didn’t read the replies but in case it hasn’t been mentioned the way to invest in crypto like a Boglehead is don’t!
Fools think their own way is right, but the wise listen to others.
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Re: How to Invest in Crypto like a Boglehead?

Post by fingoals »

watchnerd wrote: Sun Apr 25, 2021 4:38 pm
fingoals wrote: Sun Apr 25, 2021 4:10 pm
bck63 wrote: Sat Apr 24, 2021 9:49 am Crypto is nothing but fairy dust - a pump and dump scam. It's ones and zeros, nothing more.

Avoid it at all cost. Don't be the last guy caught holding the bag.
All software is ones and zeros. But somehow the relevant market size just for enterprise software is more than 500 billion dollars ...
I don't think that word means what you think it means.
I'm pretty sure that I understand the meaning of "relevant" quite well. But please make your argument - I'm curious about what you had in mind.
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watchnerd
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Re: How to Invest in Crypto like a Boglehead?

Post by watchnerd »

fingoals wrote: Sun Apr 25, 2021 5:54 pm
watchnerd wrote: Sun Apr 25, 2021 4:38 pm
fingoals wrote: Sun Apr 25, 2021 4:10 pm
bck63 wrote: Sat Apr 24, 2021 9:49 am Crypto is nothing but fairy dust - a pump and dump scam. It's ones and zeros, nothing more.

Avoid it at all cost. Don't be the last guy caught holding the bag.
All software is ones and zeros. But somehow the relevant market size just for enterprise software is more than 500 billion dollars ...
I don't think that word means what you think it means.
I'm pretty sure that I understand the meaning of "relevant" quite well. But please make your argument - I'm curious about what you had in mind.
The business of enterprise software is a poor analogy to cryptocurrency.

Ergo, not very relevant.
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fingoals
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Re: How to Invest in Crypto like a Boglehead?

Post by fingoals »

watchnerd wrote: Sun Apr 25, 2021 9:26 pm
fingoals wrote: Sun Apr 25, 2021 5:54 pm
watchnerd wrote: Sun Apr 25, 2021 4:38 pm
fingoals wrote: Sun Apr 25, 2021 4:10 pm
bck63 wrote: Sat Apr 24, 2021 9:49 am Crypto is nothing but fairy dust - a pump and dump scam. It's ones and zeros, nothing more.

Avoid it at all cost. Don't be the last guy caught holding the bag.
All software is ones and zeros. But somehow the relevant market size just for enterprise software is more than 500 billion dollars ...
I don't think that word means what you think it means.
I'm pretty sure that I understand the meaning of "relevant" quite well. But please make your argument - I'm curious about what you had in mind.
The business of enterprise software is a poor analogy to cryptocurrency.

Ergo, not very relevant.
Well, you have totally missed my point. The only reason that I mentioned enterprise software (a subset) is that I knew off the top of my head that market size number instead of one for the total software market. In other words, "relevant" above refers to the overall software market.

Microsoft Windows and Microsoft Office are technically just a bunch of ones and zeros. Nevertheless, both products made and continue to make the company billions of dollars. The OP's argument is that ones and zeros have no intrinsic value. Which is debunked even if you consider just my above-mentioned example alone. I'm not even talking about the whole market argument, which is factually supported as well. Thus, I stand by my point.
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watchnerd
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Re: How to Invest in Crypto like a Boglehead?

Post by watchnerd »

fingoals wrote: Sun Apr 25, 2021 10:43 pm
watchnerd wrote: Sun Apr 25, 2021 9:26 pm
fingoals wrote: Sun Apr 25, 2021 5:54 pm
watchnerd wrote: Sun Apr 25, 2021 4:38 pm
fingoals wrote: Sun Apr 25, 2021 4:10 pm

All software is ones and zeros. But somehow the relevant market size just for enterprise software is more than 500 billion dollars ...
I don't think that word means what you think it means.
I'm pretty sure that I understand the meaning of "relevant" quite well. But please make your argument - I'm curious about what you had in mind.
The business of enterprise software is a poor analogy to cryptocurrency.

Ergo, not very relevant.
Well, you have totally missed my point. The only reason that I mentioned enterprise software (a subset) is that I knew off the top of my head that market size number instead of one for the total software market. In other words, "relevant" above refers to the overall software market.

Microsoft Windows and Microsoft Office are technically just a bunch of ones and zeros. Nevertheless, both products made and continue to make the company billions of dollars. The OP's argument is that ones and zeros have no intrinsic value. Which is debunked even if you consider just my above-mentioned example alone. I'm not even talking about the whole market argument, which is factually supported as well. Thus, I stand by my point.
As I work in enterprise software, and have for over a decade, I find your understanding of the business simplistic and your analogy completely irrelevant.
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Re: How to Invest in Crypto like a Boglehead?

Post by fingoals »

watchnerd wrote: Sun Apr 25, 2021 11:22 pm
fingoals wrote: Sun Apr 25, 2021 10:43 pm
watchnerd wrote: Sun Apr 25, 2021 9:26 pm
fingoals wrote: Sun Apr 25, 2021 5:54 pm
watchnerd wrote: Sun Apr 25, 2021 4:38 pm

I don't think that word means what you think it means.
I'm pretty sure that I understand the meaning of "relevant" quite well. But please make your argument - I'm curious about what you had in mind.
The business of enterprise software is a poor analogy to cryptocurrency.

Ergo, not very relevant.
Well, you have totally missed my point. The only reason that I mentioned enterprise software (a subset) is that I knew off the top of my head that market size number instead of one for the total software market. In other words, "relevant" above refers to the overall software market.

Microsoft Windows and Microsoft Office are technically just a bunch of ones and zeros. Nevertheless, both products made and continue to make the company billions of dollars. The OP's argument is that ones and zeros have no intrinsic value. Which is debunked even if you consider just my above-mentioned example alone. I'm not even talking about the whole market argument, which is factually supported as well. Thus, I stand by my point.
As I work in enterprise software, and have for over a decade, I find your understanding of the business simplistic and your analogy completely irrelevant.
Well ... I have been in the IT world (including enterprise software) for more than 25 years and am still there. This is not to brag or anything, but just FYI. However, it's irrelevant. You keep missing my points even after I clarify them, so I don't see any value in continuing this discussion with you on the topic.

P.S. Re: "I find your understanding of the business simplistic" - remember, "simplicity is the ultimate sophistication". :beer
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Re: How to Invest in Crypto like a Boglehead?

Post by lemisma »

Some people here asked about FTX. I'll try to reply.
Does FTX allow US customers? I assume you are us based? What if you are us citizen but abroad all year? Can you use ftx? So there is two ftx? One US and one Non US based?
There is 2 FTX: ftx.com and ftx.us. What matters is your geographic location, not your citizenship. If you're American but live abroad year-round, you could open and fund an FTX.com account. If you live on US soil no matter your citizenship, you could only open on FTX.US

Source: I got these answers by asking support on their Telegram channel, @FTX_Official and @FTX_US_Official.
Someone also mentioned FTX but isn't that not allowed for US citizens? Or as long as you use a vpn or don't disclose to them you are a US citizen, no issue? Because if you use those exchanges that don't allow US citizens even though you are abroad, wouldn't there possibly be issues on this? I read on twitter how some ppl said just use a vpn in the US if you want to use binance but isn't that breaking laws?
I don't recommend trying to bypass these rules. FTX.com is obligated by law to restrict US-bound connections. If one day you need help from support with your account, e.g. you're locked out, and you're circumventing the rules then you might be in trouble.
FTX.US on the other hand is perfect for US-based clients! It's already in the top 20 of exchanges by volume [source: https://ftx.com/volume-monitor].

By the way, one of their most attractive offerings (even for non-crypto believers) is to simply lend your money: currently the returns are close to 20% per year risk-free! It does require 100k minimum in assets though.

Source: https://ftx.us/spot-margin/lending
Last edited by lemisma on Tue Apr 27, 2021 3:04 pm, edited 2 times in total.
langlands
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Re: How to Invest in Crypto like a Boglehead?

Post by langlands »

lemisma wrote: Tue Apr 27, 2021 1:46 pm Some people here asked about FTX. I'll try to reply.
Does FTX allow US customers? I assume you are us based? What if you are us citizen but abroad all year? Can you use ftx? So there is two ftx? One US and one Non US based?
There is 2 FTX: ftx.com and ftx.us . US residents can only use .com. What matters is your geographic location, not your citizenship. So if you're American but live abroad year-round, you could open and fund an FTX.com account.

Source: I got these answers by asking the FTX support on their Telegram channel, @FTX_Official and @FTX_US_Official.
Someone also mentioned FTX but isn't that not allowed for US citizens? Or as long as you use a vpn or don't disclose to them you are a US citizen, no issue? Because if you use those exchanges that don't allow US citizens even though you are abroad, wouldn't there possibly be issues on this? I read on twitter how some ppl said just use a vpn in the US if you want to use binance but isn't that breaking laws?
I don't recommend trying to bypass these rules. FTX.com is obligated by law to restrict US connections. If one day you need help from support with your account, it might give trouble like difficulty withdrawing funds. FTX.US on the other hand is perfect for US-based clients!

By the way, one of their most attractive offerings (even for non-crypto believers) is to simply lend your money: currently the returns are close to 20% per year risk-free! It does require 100k minimum in assets though.

Source: https://ftx.us/spot-margin/lending
Can you please correct the errors in your post? A lot of things you say contradict each other. For instance, you state that US residents can only use .com but then go on to say that "FTX.US on the other hand is perfect for US-based clients!"
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Re: How to Invest in Crypto like a Boglehead?

Post by lemisma »

langlands wrote: Tue Apr 27, 2021 2:12 pm
lemisma wrote: Tue Apr 27, 2021 1:46 pm Some people here asked about FTX. I'll try to reply.
Does FTX allow US customers? I assume you are us based? What if you are us citizen but abroad all year? Can you use ftx? So there is two ftx? One US and one Non US based?
There is 2 FTX: ftx.com and ftx.us . US residents can only use .com. What matters is your geographic location, not your citizenship. So if you're American but live abroad year-round, you could open and fund an FTX.com account.

Source: I got these answers by asking the FTX support on their Telegram channel, @FTX_Official and @FTX_US_Official.
Someone also mentioned FTX but isn't that not allowed for US citizens? Or as long as you use a vpn or don't disclose to them you are a US citizen, no issue? Because if you use those exchanges that don't allow US citizens even though you are abroad, wouldn't there possibly be issues on this? I read on twitter how some ppl said just use a vpn in the US if you want to use binance but isn't that breaking laws?
I don't recommend trying to bypass these rules. FTX.com is obligated by law to restrict US connections. If one day you need help from support with your account, it might give trouble like difficulty withdrawing funds. FTX.US on the other hand is perfect for US-based clients!

By the way, one of their most attractive offerings (even for non-crypto believers) is to simply lend your money: currently the returns are close to 20% per year risk-free! It does require 100k minimum in assets though.

Source: https://ftx.us/spot-margin/lending
Can you please correct the errors in your post? A lot of things you say contradict each other. For instance, you state that US residents can only use .com but then go on to say that "FTX.US on the other hand is perfect for US-based clients!"
Fixed the typo you mentioned :)
Any other typo/claim you disagree with?
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Re: How to Invest in Crypto like a Boglehead?

Post by langlands »

lemisma wrote: Tue Apr 27, 2021 3:02 pm
langlands wrote: Tue Apr 27, 2021 2:12 pm
lemisma wrote: Tue Apr 27, 2021 1:46 pm Some people here asked about FTX. I'll try to reply.
Does FTX allow US customers? I assume you are us based? What if you are us citizen but abroad all year? Can you use ftx? So there is two ftx? One US and one Non US based?
There is 2 FTX: ftx.com and ftx.us . US residents can only use .com. What matters is your geographic location, not your citizenship. So if you're American but live abroad year-round, you could open and fund an FTX.com account.

Source: I got these answers by asking the FTX support on their Telegram channel, @FTX_Official and @FTX_US_Official.
Someone also mentioned FTX but isn't that not allowed for US citizens? Or as long as you use a vpn or don't disclose to them you are a US citizen, no issue? Because if you use those exchanges that don't allow US citizens even though you are abroad, wouldn't there possibly be issues on this? I read on twitter how some ppl said just use a vpn in the US if you want to use binance but isn't that breaking laws?
I don't recommend trying to bypass these rules. FTX.com is obligated by law to restrict US connections. If one day you need help from support with your account, it might give trouble like difficulty withdrawing funds. FTX.US on the other hand is perfect for US-based clients!

By the way, one of their most attractive offerings (even for non-crypto believers) is to simply lend your money: currently the returns are close to 20% per year risk-free! It does require 100k minimum in assets though.

Source: https://ftx.us/spot-margin/lending
Can you please correct the errors in your post? A lot of things you say contradict each other. For instance, you state that US residents can only use .com but then go on to say that "FTX.US on the other hand is perfect for US-based clients!"
Fixed the typo you mentioned :)
Any other typo/claim you disagree with?
Thanks. No, nothing I disagree with (except the last paragraph) although I don't actually know anything about FTX or its regulation issues. What you write makes sense though. Do you know if FTX.us has much lower liquidity/offerings than FTX? I've heard that binance.us is much inferior to binance in that regard.

Regarding the last paragraph, I disagree that you can get 20% per year risk-free through crypto lending. It's not easy to get 20% return and it's not risk-free.
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Re: How to Invest in Crypto like a Boglehead?

Post by lemisma »

Do you know if FTX.us has much lower liquidity/offerings than FTX? I've heard that binance.us is much inferior to binance in that regard.
FTX offers many more alt coins than FTX.US, due to fears about US regulations. Basically, you have to be _very_ careful before offering coins to US investors.
Also, FTX allows big leverage up to 100x. FTX.US is more conservative.
As to liquidity, shouldn't be a concern unless you are Elon Musk looking to buy 1.5 billion worth of BTC.
Volumewise, FTX.us just got in the top 20, and FTX.com has been in the top 5 for a while now. https://ftx.com/volume-monitor is a good source on this.
Regarding the last paragraph, I disagree that you can get 20% per year risk-free through crypto lending. It's not easy to get 20% return and it's not risk-free.
Because of the way these lending contracts are set up, the main risks are:
- variation in the lending rate. The rate is determined every hour based on supply and demand for spot dollar on the exchange. It can fluctuate from 5% lows to 100% highs during "bull runs".
- Exchange getting hacked and losing user funds
- User getting his account hacked

Only the second and third risk exposes to loss of capital. And the 3rd isn't really specific to lending but to crypto in general.

It might not be risk-free, but there's no where near a 20% chance that a major, trusted exchange like FTX goes bust (unlike say the recent Turkish exchanges gone bust). Right now, as we speak, hundreds of millions worth of dollar are being lent out on FTX: https://ftx.com/spot-margin/lending. On FTX.US, the pool is much smaller (and the rates higher!)
Exchanges do not commonly lose user funds. They have been safe for many years. You should be more concerned with getting hacked than with counterparty risk from a Cefi exchange. As I said before the risks would have to be quite large not just present to compensate for the returns. I see no evidence that they are.
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Re: How to Invest in Crypto like a Boglehead?

Post by lemisma »

If anyone else who is trying to invest in the crypto market as a whole has any suggestions I am all ears. Even though everything feels expensive, I personally think that the industry is mature enough to invest in for the long term although it can be hard to avoid picking individual assets.
You might be interested in my other post here about what I call the "SBF ecosystem": viewtopic.php?p=5972332#p5972332 . This means:
- centralized exchanges: FTX token
- Defi: Solana and Cie [Oxygen Protocol, Raydium, Serum, Maps.me, Bonfida are the major ones. In preparation: Mango Markets, Psy Options, Phantom wallet.]

SBF gives plenty of interviews and they're available as podcasts on Youtube/Spotify. Might be the simplest way to start learning about this.
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Re: How to Invest in Crypto like a Boglehead?

Post by SlowMovingInvestor »

lemisma wrote: Tue Apr 27, 2021 1:46 pm Some people here asked about FTX. I'll try to reply.
Does FTX allow US customers? I assume you are us based? What if you are us citizen but abroad all year? Can you use ftx? So there is two ftx? One US and one Non US based?
There is 2 FTX: ftx.com and ftx.us. What matters is your geographic location, not your citizenship. If you're American but live abroad year-round, you could open and fund an FTX.com account. If you live on US soil no matter your citizenship, you could only open on FTX.US

Source: I got these answers by asking support on their Telegram channel, @FTX_Official and @FTX_US_Official.
AFAIK, US tax laws and FINCEN requirements apply to US persons (not just citizens, but also green card holders) no matter where they live, even if they take SpaceX to Mars. FBAR, FATCA all very much hold for US citizens resident abroad (slightly different reporting limits for FATCA). Lots of foreign financial institutions are unwilling to take American citizens abroad as clients for precisely that reason (after the US crackdown on Swiss and other foreign banks a few years ago).

It's possible that crypto currency exchanges can get around some of those rules if they only allow trading in crypto tokens (and do not allow conversion from fiat, i.e. real currencies), they can claim they're not a financial institution. But I'm still not sure why the rules would be different for US persons if they're living abroad -- because in general financial institutions abroad are obligated to report details of US persons abroad.
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Re: How to Invest in Crypto like a Boglehead?

Post by banook »

I'm not sure you can invest in crypto like a Boglehead. Crypto is a new-ish asset class/but also innovation with utility in currency, pseudonymous digital ID issuing (people IDs, records, NFTs), and possibly making up a new internet with web3 protocols (e.g. IPFS protocol with Filecoin). It is a speculative innovation. It is not a "safe" investment. As such, anything you stake in a pool for APR return (variable but higher than a bank) or "invest/hodl" in a hard wallet could be lost at any time. That said, it is still fascinating to me - not the investing part - the DeFi/smart contracts, digital ID, web3 distributed P2P internet, NFT/patent stuff, so I have put an amount in that I can "afford to lose". I view BTC outside of that, somewhere between digital gold and digital pyrite.

I don't include crypto as part of my holdings because I think it can vanish at any time, be regulated away, bad actors don't update protocols, etc. That said I do love the vision behind it - as misinformation has spread massively across web2, reading more about web3 seems like a neat idea. The patent system for biological organisms could be bolstered by NFTs. Most on this forum seem to have these two questions: Will it compete with fiat currencies? Are fiat currencies truly that inefficient? I think those are open questions. "Invest" what you can afford to lose. Assume it is lost the second you put money in.
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Re: How to Invest in Crypto like a Boglehead?

Post by watchnerd »

banook wrote: Tue May 04, 2021 10:37 am I'm not sure you can invest in crypto like a Boglehead.
Philosophically, I think one can make a quasi-Boglehead / efficient market case for holding them as part of a global market weight portfolio and allocating a % to them according to their market weight.
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Re: How to Invest in Crypto like a Boglehead?

Post by banook »

Philosophically, I think one can make a quasi-Boglehead / efficient market case for holding them as part of a global market weight portfolio and allocating a % to them according to their market weight.
I guess I mean I don't view them as strictly currency or ETFs/equities. I would put them more on the scale of soft(wares), like there's MANA where you can own digital land, filecoin/storj where you can stake your coin for digital file sharing purposes, chainlink is useful for accessing db APIs, technically BitTorrent is a crypto "currency, but really it's a P2P platform for sharing files.

I think maybe a reply might be how would a Boglehead invest in hard(wares) commodities like corn, gold, land, coffee, steel, etc? If there's an answer to that and it sounds like there probably is, then there's an answer to soft space/soft wares. I don't see a lot of Bogleheads being particularly bullish on hard(wares) with the exception of maybe real estate? So it's hard for me to imagine - not to say you're wrong. An example would help me understand. I also admit that I view/define crypto quite differently than others, and I am not thinking of them like ETFs. I view them as a distributed network for trading digital goods. Is there a market for that? Seems like, maybe. Is it large? Unknown.
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Re: How to Invest in Crypto like a Boglehead?

Post by watchnerd »

banook wrote: Tue May 04, 2021 11:40 am
Philosophically, I think one can make a quasi-Boglehead / efficient market case for holding them as part of a global market weight portfolio and allocating a % to them according to their market weight.
I guess I mean I don't view them as strictly currency or ETFs/equities. I would put them more on the scale of soft(wares), like there's MANA where you can own digital land, filecoin/storj where you can stake your coin for digital file sharing purposes, chainlink is useful for accessing db APIs, technically BitTorrent is a crypto "currency, but really it's a P2P platform for sharing files.

I think maybe a reply might be how would a Boglehead invest in hard(wares) commodities like corn, gold, land, coffee, steel, etc?
If there's an answer to that and it sounds like there probably is, then there's an answer to soft space/soft wares. I don't see a lot of Bogleheads being particularly bullish on hard(wares) with the exception of maybe real estate? So it's hard for me to imagine - not to say you're wrong. An example would help me understand. I also admit that I view/define crypto quite differently than others, and I am not thinking of them like ETFs. I view them as a distributed network for trading digital goods. Is there a market for that? Seems like, maybe. Is it large? Unknown.
Holding gold at market weigh is pretty easy -- it's only $10-11T, less if you count float-adjusted.

General commodities are trickier, as you'd need to develop a POV on what is the market.
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SlowMovingInvestor
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Re: How to Invest in Crypto like a Boglehead?

Post by SlowMovingInvestor »

banook wrote: Tue May 04, 2021 10:37 am I'm not sure you can invest in crypto like a Boglehead. Crypto is a new-ish asset class/but also innovation with utility in currency, pseudonymous digital ID issuing (people IDs, records, NFTs), and possibly making up a new internet with web3 protocols (e.g. IPFS protocol with Filecoin). It is a speculative innovation. It is not a "safe" investment. As such, anything you stake in a pool for APR return (variable but higher than a bank) or "invest/hodl" in a hard wallet could be lost at any time. That said, it is still fascinating to me - not the investing part - the DeFi/smart contracts, digital ID, web3 distributed P2P internet, NFT/patent stuff, so I have put an amount in that I can "afford to lose". I view BTC outside of that, somewhere between digital gold and digital pyrite.
I have a somewhat different viewpoint -- I think public blockchains have serious technological limitations compared to other software systems -- orders of magnitude slower than other distributed systems, low throughput, high processing costs, poor scaling, terrible at handling data except in small quantities (forget big data, we're talking miniscule quantities of data), limited programming environments (Solidity, for instance, is far less functional than Node.js). I know there are projects to handle some of this, but the contrast with the Internet, which was designed for scaling from it's early days or had projects designed and implemented (to fix addressing and routing limitations) long before they become needed.

The one feature public blockchains do give you is a trustless way to maintain a ledger, but you need good use cases for that. NFTs for speculation are fine, but NFTs for patents - it's not like we're worried that the USPTO is going to corruptly reassign a patent (we might be concerned that they issue patents that are not justified, but that has nothing to do with blockchain).

And we do have functional permissioned blockchain already in use in some systems -- despite serving a useful purpose, they just don't get much notice because you can't speculate with them they way you can with crypto tokens.

[The sovereign id stuff I can see might have some use, but it has a long way to go, not just technically, but in terms of laws and social mores]

That said, inferior technical solutions do sometimes prevail and I'm perfectly willing to invest small %ages in some asset classes that aren't covered by standard indexes, even if it's mostly for speculation.
Portfolio: 50% DOGE, 10% SPACs, 10% Frozen OJ futures, 10% MOON ETF, 10% NFTs , 5% FOMO ETF, 5% New Jersey Delis with $100M market cap :)
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Re: How to Invest in Crypto like a Boglehead?

Post by banook »

I have a somewhat different viewpoint -- I think public blockchains have serious technological limitations compared to other software systems -- orders of magnitude slower than other distributed systems, low throughput, high processing costs, poor scaling, terrible at handling data except in small quantities (forget big data, we're talking miniscule quantities of data), limited programming environments (Solidity, for instance, is far less functional than Node.js). I know there are projects to handle some of this, but the contrast with the Internet, which was designed for scaling from it's early days or had projects designed and implemented (to fix addressing and routing limitations) long before they become needed.
Yes, this is valid criticism. I do think there are scaling issues here, I do think there are solutions evolving. Ethereum builds upon BTC, Cardano builds upon Ethereum, etc. Remember the speed of early internet 40 kb/s or less? Now your internet connection is at least 120Mb/s or faster. Early internet protocols weren't secure. They weren't cheap. They were terrible at buffering video. What's interesting to me is that BitTorrent as a decentralized file sharing system was extremely successful once it came along it's at least 20 years old? Could you get a virus from sharing content on it? Yes. But it presented an interesting model of sharing, if you were generous and hosted lots of good content (generally US movies you couldn't get at home in your home country), you got good content faster. If you were selfish or put bad content out your IP could be kicked off. Game theory.

Is there a problem of bad content/misinformation on any/many major social media platform(s)? Some would claim, yes there are major problems. Is crypto - reputational staking on a story, staking on an ID, staking on an event or digital IP a potential solution? I think it is one of many possible solutions.. Currently, the solution is the centralized MFAANGs are the moderators. Could dystopian hell break loose on this? Yes. It is also possible. But, it's a novel solution to a problem. I would like to see it tried. I don't view crypto as an "investment" it's a distributed network solution and commodities within it.
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Re: How to Invest in Crypto like a Boglehead?

Post by SlowMovingInvestor »

banook wrote: Tue May 04, 2021 5:51 pm Remember the speed of early internet 40 kb/s or less? Now your internet connection is at least 120Mb/s or faster. Early internet protocols weren't secure. They weren't cheap. They were terrible at buffering video.
40 Kb/s ? I remember 2400 bps modems for home usage. But links between most sites were at least T1 well before the Internet became mainstream. As for security, the first version of HTTPS was released in 1994 (and other older protocols had their own security measures). And there were protocols for video/audio and multimedia in the early 90s. The main problem was lower bandwidth leading to stuttering and compression (and getting it to play on desktops, of course).

Hardware and bandwidth limitations are not fundamental Internet protocol limitations-- we KNEW we'd get better speeds and bandwidth with better DSP chips, better codecs, and optical fiber. The Internet suite of software protocols were designed for speed and high bandwidth (often only minor tweaks were required), scaling with hierarchy, and fixes for routing and addressing bottlenecks were designed or even deployed by 1991/1992 - long before the Internet became mainstream. I think that's very different from public blockchains.

ADDED: But as I said, inferior technical solutions do become widely used. Which is why I'm agnostic on crypto, neither a skeptic, nor a true believer.
I do like the Algorand crypto protocol - it uses some nice techniques to scale.
Last edited by SlowMovingInvestor on Tue May 04, 2021 7:10 pm, edited 3 times in total.
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Re: How to Invest in Crypto like a Boglehead?

Post by SlowMovingInvestor »

banook wrote: Tue May 04, 2021 5:51 pm
Is there a problem of bad content/misinformation on any/many major social media platform(s)? Some would claim, yes there are major problems. Is crypto - reputational staking on a story, staking on an ID, staking on an event or digital IP a potential solution? I think it is one of many possible solutions..
I don't want to get into a discussion that is neither investment related nor technical, but I don't get this at all. If someone posts an article with their name, they are already presumably staking their reputation on it. What does this have to do with blockchains ? You can attach a signed digital signature the way you can to an email to verify that it comes from you if using that id was by itself not sufficient. But again, what does having a blockchain solve for this use case ?
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Re: How to Invest in Crypto like a Boglehead?

Post by watchnerd »

SlowMovingInvestor wrote: Tue May 04, 2021 6:48 pm I don't want to get into a discussion that is neither investment related nor technical, but I don't get this at all. If someone posts an article with their name, they are already presumably staking their reputation on it. What does this have to do with blockchains ? You can attach a signed digital signature the way you can to an email to verify that it comes from you if using that id was by itself not sufficient. But again, what does having a blockchain solve for this use case ?
I read an article where someone was claiming that NFT's could serve as online reputational proof of something.

'Hey, let me be your financial advisor. Look, I'm rich, I have this $100K NFT attached to my Instagram account."
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Re: How to Invest in Crypto like a Boglehead?

Post by banook »

SlowMovingInvestor wrote: Tue May 04, 2021 6:48 pm
banook wrote: Tue May 04, 2021 5:51 pm
Is there a problem of bad content/misinformation on any/many major social media platform(s)? Some would claim, yes there are major problems. Is crypto - reputational staking on a story, staking on an ID, staking on an event or digital IP a potential solution? I think it is one of many possible solutions..
I don't want to get into a discussion that is neither investment related nor technical, but I don't get this at all. If someone posts an article with their name, they are already presumably staking their reputation on it. What does this have to do with blockchains ? You can attach a signed digital signature the way you can to an email to verify that it comes from you if using that id was by itself not sufficient. But again, what does having a blockchain solve for this use case ?
I'll answer your question in brief, even though maybe you don't want me to answer. Yes, staking reputation occurs with a real name, and occasionally it can result in really negative consequences if it doesn't hit well with the audience. I believe the term is "cancelled". Most millennials/zoomers have chosen pseudonyms to avoid negative consequences at work or elsewhere for digital transactions. Even here, we use pseudonyms for a reason, because certain sensitive information is shared (financial).

Another, less dire case and optimistic, picture you want to get a software or digital project finished, and you want access to a broad pool of applicants - not just the Bay Area for their high cost and potentially overpaid credentials (not always). It would be useful to know if an engineer located in country X is trustworthy. You may not know this person, but you know from examining their transactions on the chain that they efficient and trustworthy. Also, their digital ID provides surety that it is the same person. There aren't 2 "SlowMovingInvestor" or 2 "banook" accounts on various forums - whereas right now there could be. We have *some* privacy, but essentially no trust. The chain tacks on trust. This is also useful for trading/buying goods/services without an eBay or Airbnb as middleman as a ratings/bookings house, especially globally. Personally, I have occasionally had bad AirBNB circumstances and eBay transactions.

Blockchains attempt to solve the privacy and trust issues that arise in the digital space without a middle centralized broker. Also, having worked in the Ag field, where genetic patented things traverse large spaces, block chains were useful there. Piracy was rampant. Stealing was rampant.

Some may say the centralized system works just fine and there are no problems. Everything is secured and credentialed. That is a fine position to take. It isn't mine, nor is it my experience.

I realize this has gotten far away from the "investing" topic. So I guess I will add that I have dedicated 2% of our total net worth to this web system, and I've enjoyed learning about it, but I guess I'm not that focused on ROI in terms of dollars, more on building a new system. For ROI in the fiat money on fiat money system, 98% of our net worth is in ETFs/bonds/real estate at a reasonable DCA in at a reasonable diversification. Boring as heck. Bogle as heck.
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Re: How to Invest in Crypto like a Boglehead?

Post by autonomy »

Noobvestor wrote: Fri Feb 19, 2021 2:00 am Next project is going to be burying 50 barrels of crude oil in the backyard - I'll keep you posted. /s ;)
Cautionary tale: https://www.reddit.com/r/wallstreetbets ... 6000_sort/ (I realize that link may be against the Bogleheads rules, so potential NSFW language caution. Summary: some poor soul bought a contractual obligation for -$32 to accept many, MANY barrels of oil, realized what he had done, got lucky to not only get out, but made $25K on it. Makes for an musing read.)
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Re: How to Invest in Crypto like a Boglehead?

Post by Stef »

I'm using my new gaming PC for mining on Nicehash and I'm getting "paid" in BTC. Until now I exchanged it with ETH, but now I'm wondering what the best approach would be?

Invest in the 10-20 largest by market cap? Just keep ETH?
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Re: How to Invest in Crypto like a Boglehead?

Post by Prahasaurus »

SlowMovingInvestor wrote: Tue May 04, 2021 5:22 pm
banook wrote: Tue May 04, 2021 10:37 am I'm not sure you can invest in crypto like a Boglehead. Crypto is a new-ish asset class/but also innovation with utility in currency, pseudonymous digital ID issuing (people IDs, records, NFTs), and possibly making up a new internet with web3 protocols (e.g. IPFS protocol with Filecoin). It is a speculative innovation. It is not a "safe" investment. As such, anything you stake in a pool for APR return (variable but higher than a bank) or "invest/hodl" in a hard wallet could be lost at any time. That said, it is still fascinating to me - not the investing part - the DeFi/smart contracts, digital ID, web3 distributed P2P internet, NFT/patent stuff, so I have put an amount in that I can "afford to lose". I view BTC outside of that, somewhere between digital gold and digital pyrite.
I have a somewhat different viewpoint -- I think public blockchains have serious technological limitations compared to other software systems -- orders of magnitude slower than other distributed systems, low throughput, high processing costs, poor scaling, terrible at handling data except in small quantities (forget big data, we're talking miniscule quantities of data), limited programming environments (Solidity, for instance, is far less functional than Node.js). I know there are projects to handle some of this, but the contrast with the Internet, which was designed for scaling from it's early days or had projects designed and implemented (to fix addressing and routing limitations) long before they become needed.

The one feature public blockchains do give you is a trustless way to maintain a ledger, but you need good use cases for that. NFTs for speculation are fine, but NFTs for patents - it's not like we're worried that the USPTO is going to corruptly reassign a patent (we might be concerned that they issue patents that are not justified, but that has nothing to do with blockchain).

And we do have functional permissioned blockchain already in use in some systems -- despite serving a useful purpose, they just don't get much notice because you can't speculate with them they way you can with crypto tokens.

[The sovereign id stuff I can see might have some use, but it has a long way to go, not just technically, but in terms of laws and social mores]

That said, inferior technical solutions do sometimes prevail and I'm perfectly willing to invest small %ages in some asset classes that aren't covered by standard indexes, even if it's mostly for speculation.
I repeat, people with a solid technical background are typically the last people to "get" crypto, as they get bogged down in technical parameters that are either being solved, or are irrelevant. And they totally miss (read: completely underestimate) the revolutionary nature of properly decentralized networks like Ethereum, with large communities tied together through a variety of shared interests, including economic.

Developers all over the world are coding like maniacs to contribute to this rising ecosystem, and the innovation is astounding. You don't need to get hired by anyone, you don't need to work your way up, you don't need good performance appraisals, whatever. You just need knowledge and drive, and you can build the next Aave. What is the value of this exploding well of human capital? Hard to say, as we are just getting started.

My good friend, who prides himself on being the smartest technical guy in the room (great guy in general, but insufferable when talk turns to tech), has been telling me for years why blockchains are just too inefficient, and how there are no practical use cases. I'm also reminded of the many conversations I had with audio engineers as IP began to eat away at traditional telephony. They, too, were disdainful of the "new" technology, had plenty of valid "techie" reasons why IP was inferior, and were convinced IP telephony solved no real use cases and would eventually fail. And here we are...
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Re: How to Invest in Crypto like a Boglehead?

Post by RobLyons »

How to invest in crypto like a Boglehead

Step 1. Avoid crypto
Step 2. Repeat
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Re: How to Invest in Crypto like a Boglehead?

Post by SlowMovingInvestor »

Prahasaurus wrote: Wed May 12, 2021 1:03 am
SlowMovingInvestor wrote: Tue May 04, 2021 5:22 pm
That said, inferior technical solutions do sometimes prevail and I'm perfectly willing to invest small %ages in some asset classes that aren't covered by standard indexes, even if it's mostly for speculation.
I repeat, people with a solid technical background are typically the last people to "get" crypto, as they get bogged down in technical parameters that are either being solved, or are irrelevant. And they totally miss (read: completely underestimate) the revolutionary nature of properly decentralized networks like Ethereum, with large communities tied together through a variety of shared interests, including economic.

Developers all over the world are coding like maniacs to contribute to this rising ecosystem, and the innovation is astounding. You don't need to get hired by anyone, you don't need to work your way up, you don't need good performance appraisals, whatever. You just need knowledge and drive, and you can build the next Aave. What is the value of this exploding well of human capital? Hard to say, as we are just getting started.

My good friend, who prides himself on being the smartest technical guy in the room (great guy in general, but insufferable when talk turns to tech), has been telling me for years why blockchains are just too inefficient, and how there are no practical use cases. I'm also reminded of the many conversations I had with audio engineers as IP began to eat away at traditional telephony. They, too, were disdainful of the "new" technology, had plenty of valid "techie" reasons why IP was inferior, and were convinced IP telephony solved no real use cases and would eventually fail. And here we are...
The Internet was built by engineers, as a decentralized network ! And government entities like DARPA and NSF no less.

And it was built for scaling in naming, addressing and routing well before it went mainstream -- the fact that so few changes have been required at its interconnectivity layers over decades shows how well it was built! I don't know what audio engineers (which is not the same as a network engineer) you talked to, but almost all telco engineers I talked to (including at Bell) even 30+ years ago acknowledged the strength of packet switching, and some were even working on switches for voice packet networks.

And open source usage is hardly anything specific to blockchain -- people have been 'coding like maniacs' on general open source software since the 80s. Although notable that the early pioneers of open source software (FSF) wanted to wipe out proprietary software and that definitely didn't happen -- they even split with Linus on that.

Perhaps engineers do have tunnel vision. Or perhaps being pragmatists, they're prefer to avoid inferior solutions on the basis of ideology. Throughput, speed and programming environment are hardly irrelevant, and it remains to be seen how well they'll be solved. I know distributed systems engineers who were working on a federated project a few years back -- they used Merkle Hash Trees, an ordered log, several blockchain like features -- because it worked well when there were a moderate number of participants.

But as I said above, inferior solutions can prevail or even dominate (Windows for decades), so I never let that impact investment decisions. I've even commented before on ways to get good returns from blockchain.
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Re: How to Invest in Crypto like a Boglehead?

Post by SlowMovingInvestor »

Oh, and I'm not biased against blockchain. There are several technical aspects of blockchain I like. I like Algorand's consensus protocol, for instance. I like some of the new crypto techniques used in some protocols (such as Monero).
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Re: How to Invest in Crypto like a Boglehead?

Post by Prahasaurus »

SlowMovingInvestor wrote: Wed May 12, 2021 7:58 am Perhaps engineers do have tunnel vision. Or perhaps being pragmatists, they're prefer to avoid inferior solutions on the basis of ideology. Throughput, speed and programming environment are hardly irrelevant, and it remains to be seen how well they'll be solved.
Many engineers (not all, I'm an engineer) get sidetracked by "throughput" or "scalability" or whatever (pick you technical parameter) and underestimate the revolutionary nature of this new technology. DeFi cannot be built by a company. This is about global communities, about shared ownership, about meaningful transparency. It's a huge middle finger to JP Morgan and Goldman Sachs, to Wells Fargo, to Facebook, to centralized control and surveillance, to the closed, corrupt, double dealing, oligarchic system that dominates 21st century crony capitalism. Today Ethereum just passed JP Morgan in total market cap. And we are just getting started!

Are you surprised so many young people are drawn to crypto? Awash in student debt, priced out of the housing market, working long hours to make their boomer CEO ridiculously wealthy. "But kids in crypto just want to make money," you reply. "It's just speculation, just Dogecoin and Safemoon or whatever, nobody cares about anything else!" Fair enough, not everyone cares about decentralization. Just like I'm sure most of the people who stormed the Bastille just wanted more bread and wine. They weren't necessarily looking to overthrow the monarchy, weren't overly fixated on liberté, égalité, and fraternité.

We are building a new financial system that is more inclusive, fairer, no longer limited by borders, by who you know, by the school your parents could afford, by your nationality. This is exciting! Users - many of whom are teenagers! - are involved with the projects directly, they build, interact with developers, they vote in the DAO on new features, they see the seeds of something new and exciting, something in which they are involved from the beginning, that they can help build, guide, and own. I've seen more innovation in my one year in DeFi than I've seen in 30 years of traditional finance. There is no comparison, nothing comes close to this.

If a more inclusive financial system means we sacrifice speed and scalability in the short term, so be it. Because something much more important is at stake. Decentralization is everything. This is a revolution, and in the end, one way or another, we will win. In twenty years, your stocks and bonds will all be tokenized. And I believe they will be traded on Ethereum.
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Re: How to Invest in Crypto like a Boglehead?

Post by SlowMovingInvestor »

Prahasaurus wrote: Wed May 12, 2021 8:53 am We are building a new financial system that is more inclusive, fairer, no longer limited by borders, by who you know, by the school your parents could afford, by your nationality. This is exciting!
From what I've seen the demographics (nationality, background, university education) etc. of key crypto project personnel are no different from those of standard tech unicorn startups (including fintech). [ And even less 'diverse' than say the CEOs of big tech]. And many projects are HQed/have key personnel in the same tech hubs. Degrees (including Phds) from the same Universities - MIT, Waterloo etc.

[ And Proof of Work/Proof of Stake are hardly egalitarian protocols. The Winklevossi of the world still have an advantage.]
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Re: How to Invest in Crypto like a Boglehead?

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