Crypto Any lessons learnt from Crypto

Crypto has been very much boom-bust since it was invented but each bust is less severe than the last

 

Excellent episode in the Rational Reminder crypto series.

Understanding Crypto 6: Bruce Schneier: Security, Trust, and Blockchain — Rational Reminder

 

I know enough about it to have allocated capital towards it, but not enough to have huge sums in it (in saying that at the peak it got to six figures). I don’t loose any sleep over it but in my humble opinion it’s arrogant to completely dismiss crypto currency. Whilst extremely volatile and speculative there is something here in my opinion and that warrants a small allocation.
My preference would still be land and index funds as truth be told when a crypto related company gets big enough it will be listed and climb the ranks so index/own.
Lessons learnt have been more behavioral to be honest, people have very short memories and forum threads will be very different in 3-4 years from now with BTC in my opinion getting to 100k a coin mid decade.
I am by no means a crypto fanatic but it’s very silly to dismiss it in my opinion.
Started adding again July first!

 

People who dismiss all crypto as a scam or provide examples of small alt coins which are scams - just demonstrate that they don’t understand the technology at all.

if someone refers to it as “crypto currency” they really don’t understand what blockchain is. The vast majority of it us not meant to be money. I’d say a better comparison is saying you are buying shares in Microsoft Windows. Not in Microsoft, in Microsoft Windows. Any future increase in price will be if “Microsoft Windows” succeeds and people build software on it.

I’d compare what’s happenning now in blockchain to the late 1990s when there were hundreds of tech companies innovating and trying to build all the things we have today. Most won’t survive but the ones that do will be huge.

Remember when people mocked things like listening to the radio over computer because it was clunky? Now you all have Netflix and streaming on demand. The vision and application was there, just took time for both the product and the customer to mature.

blockchain is in the infancy, the same as the internet was in the late 1990s.

mock it all you want but a small allocation of your time and money to it would be worth looking at.

 

Are you suggesting to invest in a diversified portfolio of crypto small cap growth companies (ie lottery stocks) or crypto assets themselves?

 

What if Bitcoin hits 80K again? Avoid a FOMO. Buy now lol

 

Good point Datto.

 

The phrase “lottery stocks” is pretty demeaning to anyone who is immersed and researches a lot in crypto. Same as saying anyone who bought housing in the last 30yrs got lucky with their timing.

There are many “stable coins” in Crypto
For those with a long term horizon. Bitcoin and ethereum would be a reasonable safe bet for most with a 10yr hold.

for “lottery stocks” - go find blockchain projects with real world use that’s currently being implemented and ride the train.

 

"Lottery stocks" is a term used to describe small cap growth stocks in general. As a group they tend to do terribly, underperforming the market with a small number achieving lottery like outcomes.

Unless you are very lucky and place a bet on the winners and avoid the losers, generally a class of assets to avoid. Again not making any judgement on companies in the crypto space, more about trying to pick a needle in a haystack with stocks that have lottery like characteristics

We have seen recently how "stable" some of these stable coins can be.

How is picking Bitcoin and Ethereum anything but placing a bet in the lottery? It is certainly not diversified across the sector. Most people are speculating on BTC in the hope that it will be worth more in the future rather than for some real world purpose.

 

Another great episode. A second guest raising the point that miners need fiat to pay for electricity. For those speculators counting on a rebound like the past might be sadly out of luck.

Understanding Crypto 7: Nicholas Weaver: A Computer Scientist's Perspective on Cryptocurrencies and Blockchain — Rational Reminder

So the obvious question, Nick, how do you see this all playing out?

Slow, then fast. So the problem is, the previous bubbles in the cryptocurrency space have been very isolated but without debt. So back in 2013, the cryptocurrency bubble was about the size of the Beanie Baby craze, and critically it was fueled by fake transactions on Mt. Gox, fake money on Mt. Gox, and why it collapsed, it went away. The 2017-2018 bubble was driven largely by Tether. It was an order of magnitude bigger but still relatively small, and there wasn't a lot of debt. This time around, there's a lot of debt, but not just a lot of debt, but a lot of debt that takes real money. So over the past year and change, the cryptocurrency miners have seen the price go way up and the mining go way up, and yet they were never selling Bitcoin. They were holding onto it and borrowing against it to pay power bills.

So now there are billions of dollars worth of Bitcoin that have been borrowed against to pay power bills, and power bills don't take funny money. They don't take Tether. They don't take Circle. They don't take Stablecoin. They want actual cold, hard cash or a electronic transfer from a real bank, because let's face it, our money's been digital for a generation now. So this creates mechanisms of positive down feed back loops. We saw a couple happen when these initial round of recursive Ponzis dropped off a couple weeks ago. So a couple of automated liquidations kicked in, sold reportedly about 600 bucks worth of Bitcoin, and the price dropped by a thousand bucks in the space of five seconds... or five minutes. Things have stabilized out for the moment as a lot of these recursive Ponzi schemes have fallen, but there's a lot of pressure that will continue to grind things down.

The other factor is, PT Barnum may have said, "There's a sucker born every minute." That still means there's a limited number of suckers available. How many suckers will be fooled by a Matt Damon commercial now that weren't fooled six months ago, and well, fortune favors those who grab their pitch forks and torches and go to Matt Damon's house to get their money back. So what I think is going to happen is, the price is going to bounce along and grind down, but when it collapses, it's going to collapse very suddenly and will get these feedback loops where it might take a week, a month, a year to grind down a couple more thousand bucks. Then all of a sudden it just, boom, collapses, as you've got these recursive dominoes and houses of cards all stacked up on each other, and it just goes away. Hopefully, it will go away, period, because there is no "there" there. There is no financial innovation in the space. There is no technical innovation in the space, and when it collapses, it's going to have burned so many normal people that there'll be no suckers left.

 

Bitcoin is the only unconfiscatable asset we have! That’s an innovation. It’s the only asset that’s able to be transferred across the globe at the speed of light, without a trusted third party, without risk of censorship. The supply cannot be inflated and the issuance is known for the next 100years. This is innovation never seen before!

 

Did you listen to the podcast?

 

I just skipped through the first 30min. He was wrong on a lot of things in just just this section.

 

Are you sure?

Two Arrested for Alleged Conspiracy to Launder $4.5 Billion in Stolen Cryptocurrency

I think you'll find it can be.

 

My 'Rule of Thumb' for 'investments opportunities' is as soon as the proponents starting advertising on the TV the fall isn't far away. . . . So the Matt Damon adverts were the signal!

One example of this was ostrich faming. When I first came to Australia I lived in a rural area and I saw ostrich farms springing up everywhere with huge sums being paid for birds.
Within a year of the first TV advert there wasn't an ostrich to be seen.

 

Care to share some examples. He seemed pretty well informed, following and writing papers on crypto from the early days

 

No if you secure it properly it cant. It can be held in a “brain wallet” so until they find a way to read peoples minds you can take it across borders undetected!

 

It is very hard to change the code hence why it takes a long time to get improvements implemented. The nodes do have “voting power”look at UASF. Once a lightning Chanel is opened funds can be sent infinitely at near zero cost and instantly.

 

Hi mate tagging this as like the lottery dtock example.....alot of talk on other places about SQ2 but very new abd volatile