SharperDingaan

Three approaches. Go with the large numbers of moderate sized players, experimenting with blockchain via ETH token. Go with the fewer but more influential bigger players implementing on the hyperledger, using the cloud providers and consultants. Park-in/trade-around BTC in anticipation of a coming global currency 'reset'. ie: An asset allocation to crypto, and two/more strategies within that allocation. For meaningful results, a larger asset allocation is required. As it will take time for ETH demand to develop, arguably the allocation can be 'grown' to target, versus fully funded at start. Risk tolerance and time horizons are the major drivers. We have chosen to 'grow' the allocation, by trading BTC; the allocation growing again as the portfolio repatriates some of its capital. We take the long view, and view the allocation as akin to putting ships out to sea. Hopefully, 3 years out, they are arriving back in port as our oil/gas investments are waning. Time as our friend. Different strokes. SD

It is actually very straight forward to settle in live time. Securities as a debit/credit directly from/to the wallets. Each trade funds movement passed through the CB omnibus account. No issues with counterparty scares (contagion), as all funds movement is guaranteed by the CB; all netting internal within the CB, as frequently as the CB decides. CB charges each player a fee for the guarantee. Liquidity controlled at the player level by setting maximum netting shortfalls. New tools, for a new era. SD

Growth investing is all about scaling up to boost operating leverage; unit costs dropping faster than sales price cuts to increase margins, P&E contracted out wherever practical to minimize fixed overhead, etc. Grow the networks you are on, &/or acquire and fire. Prune aggressively as you go. Investment folks screw it up, by discounting future cash flows at k-g. Sh1tty forecasts (vs eventual actuals) discounted at ultra-low rates to maximize the capitalization value; higher the growth rate the worse the problem. Hence you're betting on the underlying company, and against the investment community. The perfectly good company, mauled simply because the growth rate faltered for a period. Ideally bought with the gains from an opportune put. There is a reason why growth companies are primarily either tech or pharma. SD

The valid energy comparison is ALL energy use by ALL FI's/custodians/payment rails in the globe versus the energy use of ALL crypto x the proportion used by De-Fi. Crypto uses a lot less total energy, but it's not the folklore - so we don't want to hear it. It is well known that investment/finance people are utterly useless at tech valuation. There is no value until the tech is generating a probable future cashflow that can be discounted, a multiple applied to it, and the result divided by the share count. And there is no value unless the tech produces new mouse-traps. Therefore nobody invested in the first Apples, Chip Makers, Velcro producers when they were concept proven start-ups. Mind, and process gaps, that exist to be exploited. Blockchain is architectural disruption; the same mouse-traps delivered differently, at much lower cost. To the consumer it's the same mouse-trap, BUT A DIFFERENT PRODUCT - because it's a different user experience, and a different 'story'. To the blockchain using business - it is fresher product, cost effective per person customization, material cost savings, and material improvements in both agility and productivity. Of course the results will not show up on the bottom lines for quite some time, well beyond the <18 month horizon of most investors. Hence to most investors, this is utter sh1te! Whereas to operators it's golden - the opportunity to BOTH fundamentally and materially improve cost structures, AND 'go private' at depressed valuations relative to future prospects. Greater profitability, easier to run, and no more whining shareholders and their associated costs! Not what investors want to hear. SD

A tech question: At capacity, does incremental "mining" become more difficult? E.g. would the fee paid to the miner in your above scenario need to increase as each subsequent transaction costs slightly more resources to execute over the blockchain? 'Capacity' is a 'fuzzy' concept - to some this is the 21M issued, to others this is after 'adjustment' for 'lost' coin. Tech vs Business (Investors) have different views. Difficulty is controlled by an algorithm, controlled by the amount of CPU time currently being committed. The aim is 10 minutes; if there is too much CPU - difficulty is increased until some of it drops away. If it costs more than it is worth to mine, the expectation is that miners stop. In pragmatic terms - it means fewer/bigger miners, and more possibility of a 51% attack. Against which the miners are now more likely to be 'known' to the collective security interest. SD

At capacity, the two transacting parties collectively pay the miner out of their own wallets - who pays what % set by the design. An update becomes a fixed commission cost; favoring high value transactions, reducing the number of miners required, and creates an oligopoly. 'Regulation' enforced by the collective interest of the anonymous owners, in the manner they so determine. SD

The fiat currencies of stable, developed governments and economies routinely collapse when under severe stress. Currency 'systems' are simply an agreed approach that work for a time - until they don't. While the times change, the 'system' doesn't; and it periodically gets an 'upgrade' (gold standard exit, Bretton Woods, change in reserve currency, etc.) . https://en.wikipedia.org/wiki/Gold_standard To most people, it is quite obvious that post QE/Covid - there is going to have to be a system 'upgrade'. We don't know when, and we have no idea as to what that might entail, but in the meantime - we have a way of protecting ourselves against adverse change; BTC. BTC acting as both a global store of value, and as a global reserve currency. Not the preferred solution, but until there are better alternatives - a smart one. Practical, vs beneficial, ownership are very different things; when push comes to shove - practical always wins. Blindingly obvious to anyone from the lands of dictatorships, but hard to see if you are from NA. Do you really think that an outstanding czarist imperial perpetual bond is still being honored today? or than your <2008 Icelandic bond is going to honored in full? https://en.wikipedia.org/wiki/2008%e2%80%932011_Icelandic_financial_crisis Hence the ongoing Yin/Yang of atheists vs believers, and the global rising concern of CB's. The clock on the next system 'upgrade' has already begun. SD

Think of the roll as 1) buy BTC, 2) buy out-of-the money BTC calls, 3) sell BTC at a higher price to GBTC, 4) then take BTC delivery on those now in-the-money calls. Guess at how much of that notional outstanding call volume was naked ;) inflating the quantity actually available for sale. That naked volume doesn't hit the market until the contract settles, when it ratchets up price - pushing more options into the money. Manage that 'push', and you essentially 'corner' the market (at total available BTC float well <21M ... you don't need much volume } The volatility isn't just because of BTC going mainstream. SD

Deduct commission and wind-up costs, and a 6% discount to the BTC value is about right. Rather than use BTC options; we opted to swing trade the dips up to our original investment, and take the gains/losses off the table. As/when the volatility dies down, there are commission savings if the BTC is simply sold for a BTC-ETF, and trading confined to the ETF instead. So far, it has worked very well :) SD

This thread demonstrates the Yin/Yang of crypto. There is no convincing either side; and as the wheel turns, the influence of the dominant currency will wax/wane. However, the two extremes co-exist, they each need each other, and the intense competition ensures that they each perform at their best. As users of the currencies, we're all better off. SD

The value of a currency is the result of supply/demand for it. Sure, tax creates demand - but it's just one component of many. Raise your tax too high, and the value of your currency falls - as your country is not competitive; I either sell down my local assets and take the money out, or borrow against them in local currency to pay local taxes as they come due. There is nothing wrong with the understandings. SD

Like it or not, crypto is an asset class. There are only two investable assets in that class, BTC and ETH, and it is because they both have a reliable, and robust derivative market (CME futures/option). A 0.5% asset allocation to crypto, within the total global investment portfolio, and significant price increases are inevitable. What one thinks of a BTH or ETH, is largely irrelevant. BTC/ETH are just apps, using the underlying Bitcoin and Etherium Protocols (the 'blockchain'). Blockchain is replacing legacy systems the world over, but in the short/near term it raises costs, as both systems must run in parallel. Prove the blockchain replacement works, and that it is robust - then you can drop the legacy systems. Short/medium term BTC/ETH outperforms, longer term it underperforms. Allocating to BTC, then into 'other' is just being smart. Gain on the increasing acceptance, protect yourself against potential currency devaluation, and sell high/buy low in the 'other' of choice. Every time there is more QE, BTC benefits even further. Can you value this? No. Is it the obvious direction of choice? Yes. Hence - the markets inability to adequately deal with it. You can be roadkill, or you can go with the flow. But your flexibility is key. SD

"So to pay taxes, dump BTC and buy USD. That sounds like a source of USD demand/support to me." Nah. I just took this years incremental US10M increase in wealth out, and bought back US100K to pay my taxes. Net drain of USD9.9M. But ... if I'm doing this every year, mostly parking the money in BTC, and the USD steadily devalues (re: too much QE) over the interim - when I eventually convert the BTC back into USD - the USD FX gain may well exceed the total USD tax paid over the interim. SD

To pay your taxes, simply sell some of your BTC for whichever fiat you need - at the time that you need it. The rest of the time, you just keep your wealth in some other currency .. another fiat (Euro, GBP, etc), or a crypto (BTC, ETH, etc.). Business as usual. Sure you can identify the wallet holder, even seize it; but you CANNOT transfer the value of the BTC without the private key. And if that BTC had already been pledged as collateral for a loan or stable-coin, obtaining the private key still will not help you. No different to what already occurs today in many money laundering transactions. Rare paintings are routinely stolen, and held as collateral against an eventual capture. I pay 1M to have the Rembrandt stolen, you give me 5-10 years off my sentence if I give it back - more years off, the more famous the painting is. BTC is just more efficient, and leaves the Rembrandts in the galleries - where everyone can now see them. It's essentially architectural disruption - the product (criminal usage) hasn't changed, just the plumbing. To contain it, CB's have to collectively put up a better alternative. Not a bad thing. SD

Demographics matter a great deal here. The older generations see BTC as a means of paying for things; BTC has zero value, because there is nothing backing it. The younger generations just recognize that US Dollars (CB fiat) are no different; "In God We Trust" is a scam. The actual backing of a fiat currency, is nothing more than the CB on the levers of both monetary and fiscal policy. We can't repossess a sovereigns assets or receipts, 'In God We Trust', means that we trust the CB not to f*** it up! Across the world, the last decade hasn't been good for CB's, and people aren't stupid. Negative borrowing rates, and paying your bank to hold your cash (Swiss), are hard evidence that CB's are failing. Paying 75bp to hedge my BTC, or paying 75bp to a swiss bank to keep my money, has the same outcome; but if I hold BTC - I make a MTM gain if there is a sudden devaluation. Treasurers aren't stupid either. BTC is becoming mainstream for a reason, and it is because of declining trust in the ability of CB's. CB's either get their collective act together, and offer a viable alternative, or people do it themselves (crypto currencies). Highly unnerving for CB's, 'cause to question 'God's' ability, is to threaten fiat currency itself. There is a reason why the 'Hamilton vs Satoshi' rapper skit, had such 'high level' audience participants. We think CB's will ultimately prevail, but they will have to be forced, and they will need a material cultural turnover within their ranks. All good! SD

The value of BTC is as a store of value, and it does that very, very well. Steal big, and you have an anonymous safe place to store your loot; protected by both technology and the collected ‘enforcement’ of other similarly influential, and like-minded people. Rob a bank, or steal via QE driven inflation; you have the same need - and similar influential like-minded people. What a coincidence! Yes, it’s a great storehouse, but it’s a sh1te ‘store of value’. Not any more - CME derivatives allow the user to continually hedge the value of BTC, and at an ongoing cost well below that of alternative ‘security’. To the anarchists central banks are criminals, on par with the obvious buyers of BTC. The anarchists just recognize that when two scorpions are confined within a small bottle (Yin/Yang), everyone is safer. Mutually Assured Destruction, is a well-proven nuclear arms deterrent. Should an Apple, Google, or Facebook create their own currency, it would quickly become a global reserve currency – and compete directly with central banks. Forcing central banks to issue their own digital currencies, and a digital global reserve currency for trade settlement - backed by all central banks. All good. The rub is that BTC is like no other asset, so how do you value it? The reality is that you cannot, hence the need for ongoing hedging, and co-opting the gambling market that it creates - criminals aren’t stupid. Accepting BTC for a luxury goods payment, is just being practical; a payment in dirty money, or BTC - the outcome is the same. Whether that be cars, or Rembrandt’s bought as future ‘get out of jail free’ cards. Point? BTC is here to stay, value will change according to the underlying need, and there will be hiccups along the way. Nobody likes change, and this is not your grandpas or your dad’s technology. Ever since day-1, cultures and businesses have sought out the rebels, and ‘assimilated’ them (Star Trek ‘Borg’). Todays rebels become tomorrow’s leadership, and this is no different. SD

Over what period? Exiting, and post, Covid - costs (everywhere) are going to be a lot higher - get over it. There aren't enough truckers, there is a strong desire to remain closer to home, it is not a 'preferred' occupation, and many are treated like trash. While Covid is with us, a great many have voluntarily either deferred (or come out of) retirement; post Covid a good 20% of long-distance drivers are going to walk away. Pay up, and pay more for everything being transported. No migrant workers, no crops planted, or picked. You still have to eat, but with less supply, food is going to cost a lot more. Current grocery store increases are just the beginning, and it's everything relying on cheap labour doing what locals will not. 20-30% increases pretty common. Stimulus comes at a future cost. Most would expect at least another 20-30% in either higher taxes (income, consumption, etc) or FX devaluation as imported food now costs more. How much impact, depends upon what you buy. Income for the unskilled is not going to rise - unless either 1) minimum wage increases, 2) workers work more hours, or 3) there is some kind of governmental minimum income. Severe disruption, and most places are looking at option 3. Point? Little Johnny/Suzie should now expect a much lower inheritance, because gran/grandpa now need the money to eat. For many young people, cutting their dependency on golden handcuffs, will be the best thing that's happened to them in quite some time. SD

This was pretty good ;D Gave me a good laugh and was actually quite catchy. Does anyone else find it ironic that during a period of intense government control and essentially total compliance by the population, that an "asset" which is reliant on stripping the government of power is the investment of choice? Until now we've all had to accept the abuses inherent with fiat currency, and all we could do was swap one fiat for another - the meet the new boss; same as the old boss. Now there's a real choice, and at all times - the fiat currency is always the safety net. The alternative to BTC is a global digital RESERVE currency - & elimination of USD reserve currency status. Today, central banks either get their collective sh1te together - and offer it (soon), or BTC becomes the RESERVE currency of choice. But it couldn't happen, had BTC not been invented by anarchists. All good. SD

For those still seeking a 'modern day' explanation of de-fi, might I highly recommend Hamilton vs Satoshi ;D Change isn't coming anymore, it's here !!! SD

Not to rub it in ... but then there's the Pat Ryan & the Rocky Mountain Band, 'Bitcoin Song'. https://video.search.yahoo.com/yhs/search?fr=yhs-norton-ext_onb&ei=UTF-8&hsimp=yhs-ext_onb&hspart=norton&param1=715c1b21-f757-45b3-abef-000b5658630d_2019-07-29_cr&param2=ds_direct_ignite&param3=ngc_22.17.3.50_wk31_2019&param4=35170&p=bitcoin+song&type=cr_ds_ignite_wk31_2019#id=1&vid=85236c3ee4f4fac2b6ecdaa6064ab664&action=click $400 worth at a dime = 4,000 BTC Today, USD 220M - at USD 55K/BTC. Holy macaroni .... I AM rich! Alternatively .. you can just be part of the HODL gang! - reminding yourself that 32% of young people prefer buying BTC, to stocks. https://video.search.yahoo.com/yhs/search?fr=yhs-norton-ext_onb&ei=UTF-8&hsimp=yhs-ext_onb&hspart=norton&param1=715c1b21-f757-45b3-abef-000b5658630d_2019-07-29_cr&param2=ds_direct_ignite&param3=ngc_22.17.3.50_wk31_2019&param4=35170&p=bitcoin+song&type=cr_ds_ignite_wk31_2019&_guc_consent_skip=1613916797#id=13&vid=e4f77d83cf371b4cf42efe5d0fa8c093&action=view And we now have a BTC ETF fund just for you! https://www.theglobeandmail.com/business/article-worlds-first-bitcoin-etf-begins-trading-on-tsx/ SD

And BTC is now at USD 53,700. A few bunnies now, attracting a whole lot more into the coming buffalo jump ;D SD

Depends on what you do, and what you are looking at. If you're been very busy the last few weeks, and most that you know have also been busy, the market is not going to react until months later - when that activity (if significant) finally shows up in the numbers. You are really a leading indicator, and hence at an advantage. You see tops and troughs in your industry, before the market does. Mr Market is also consistently and routinely wrong. If you doubt that, check any pricing strip against the actuals as they become available; you quickly conclude that the market exists to be exploited ;) SD

Diversification ..... by what? Time (short, medium, long term), asset class (house, car, stock, bond), debt (LOC, CC, student loan, mortgage), income (FT day job, PT gigs, investment, pension, other), etc. Position size is far down the list. A 50% position in a 10% asset allocation is 5% of your wealth. For most people, simply getting a temporary PT gig will have a more reliable and meaningful impact on your wealth. Even more so, if the earnings were simply used to pay down CC debt. But not sexy. For most people, investing in the same industry that you work in, is a dumb idea - when you lose your job, you also lose your savings. But for the few who can manage risk, it is often a very good idea; as many contractors, and financial folk can attribute to. Invest the time fretting about diversification, in risk management instead, and you will go a lot further - sooner. SD

Re disclosure. We have reduced our position in FFH, and moved our gain to date (29%) elsewhere. If ever there was a time to be in FFH it is 2021, and at a time when the world is coming out of Covid. Hopefully by late Fall; o/g is solidly recovering, GBP is weakening, and we will get an FX boost on repatriation as well. If you have the risk tolerance, look at the CVE warrants ;) The nearest thing to a leap, and a lot more liquid. SD

The corporate interest is blockchain implementation. Introduction is via Bitcoin Protocol, crypto currency as an asset class (BTC, ETH, CME derivatives), 'token' riding on a crypto-currency 'ETH, XLM', and the HyperLedger. The bigger players implementing directly on the HyperLedger, but the execs need to get up to speed. BTC/ETH/XLM as an investment, is largely secondary. SD