SharperDingaan

I'm curious what your thought process was originally, i.e. getting into the cryptos. I found it technically interesting and noted the all in of the Vinkelvoss twins (no need to snigger here, just because they lost to Zuck, remember they were absolutely right and early on social media.) But I could not pull the trigger in that I would only be buying on an estimate on what others would find attractive--see Keynes on judging the judges of a beauty contest. I came into cryptos via block chain and the smart contract. I was looking for a thesis topic, found this technology incredibly practical and appealing, and used the opportunity to do a deep dive into what it is. Combined with 20 years+ of business experience in both FI's and supply chain; the result was a 'how to' thesis in the strategic implementation of this technology in 'day-to-day' business - from 'blank paper' through to 'finished working product'. Obviously, its a valuable skill today - and available to all for a very modest hourly fee ;) Along the way I had to research crypto, their relative merits, and their limitations. It was quite obvious that Bitcoin was truly unique; once the 'videos' and 'textbooks' started explaining it 'en masse' - the odds on it ultimately becoming 'mainstream' were also pretty good. Our own view was that Bitcoin would not take off until it became both investable (futures, options), and respectable for institutions to hold. It happened sooner than we thought, and we sold as Chicago started offering derivatives. Ultimately we bought a few Bitcoin just to get the 'feel and experience', and traded the volatility; executing through various exchanges largely as a science experiment. Continuous reinvestment grew the number of coin, & ultimately we dumped at high prices & took the $ off the table. Today we hold T-Bills, and a whack of WCP, instead. To a large extent we've been very lucky; right time, right experience, and increasingly - right place. Maturity, expertise in value investment, backgrounds in petroleum engineering and finance, and experience with some of the worlds nastier 'hot spots' has been extremely helpful. We totally get both the anarchist and CB viewpoints, because we've seen both. The technology is incredible, but the weakness is people. Transformative managers with strong people and social responsibility skills are going to rule the world. SD

Just a quick FYI for those in the Toronto area, with an interest in crypto-token, block chain, smart contracts, etc. Look at the 'Finance' and 'Innovation' sections. https://learn.utoronto.ca/courses-programs/business-professionals/courses/skill-builder-series SD

Why would anyone ever look at it from another point than "what it has grown to"? You still risk the same amount, regardless of where the wealth initially came from or what amount you invested versus your total wealth. Depending on where money comes from (income, inheritance, investment returns, bonus, windfalls, etc.) people tend to invest differently. This is completely irrational behavior. I do it too of course but try to be at least aware of it. And if you decide to hold your current positions, you are effectively making the decision to buy them now at current prices. Ask yourself if you would hold the same positions if you were to start over with a new portfolio. Specifically ask yourself this: If I were to restart with 100% in cash and the same knowledge, would I invest 40-45% in crypto's today? More power to you if you would. Just make sure that it is a conscious decision. This is the 'casino' effect, and why it's helpful to have 'rules of thumb' when you're getting material portfolio distortion. Ultimately there is a need to periodically take $ off the table, but everyone will make their own decisions. SD

Who knows what will happen, but I have a feeling Joe Average hasn't even started selling yet. Buying and ultimately selling bitcoin, isn't as easy as the advocates would have you believe. So there is a lag between when the larger players sell, and the small average investor's get to sell. The smaller players, especially the ones buying last at the higher valuations, will be left holding the bag. Cheers! Like everyone else, I had all kinds of students/recent grads asking 'how do I get in' around Nov/Dec of last year. The prevailing attitude at the time was max out the credit cards, buy Bitcoin, and just pay the minimum every month. As is our custom; when we sold, we also disclosed our exit. About 1 in 4 sold shortly thereafter. Every value investor has to learn how to 'recognize thesis change, and sell '; and as we've all learnt, it's a painful but essential lesson that isn't in the text books. I understand that a lot of the credit card buyers are underwater, and many just want out at the price they paid. I expect that maybe 1 in 3 have the fortitude to 'tough it out', the rest are going to cave as they get further into the red. This suggests heavy selling into the rallies, and rising selling as price descends. Systemic downward price spirals. Notable is that it's the same behaviour we see with novice day traders - and the stocks they tend to follow. The clampdowns, regulatory actions, & CB interest rate raises; infer that 'moral hazard' is back in fashion. And we know from US prosecution practice that it's the 'little fish' first; then you move up. It doesn't look good for the token. SD

Bitcoin crossed USD 8,600 today - we would suggest that it will not be long before it falls < USD 2,500. Tether isn't going away, as price falls to what Joe Average paid - selling should accelerate, and there are limits to the 'never sell' attitude of the early stage developers. It's easy to boast at 15,000; not so much when it's below 5,000 - and still falling. We don't see any near or medium term positives. The only real question now is how low it ultimately goes, and how long it takes to get there. History being made before our eyes. SD

.... so at this time trying to see which one is Google and which one is Yahoo. It's too early to make this determination. Quite a few folks would suggest that it is more likely to be those providing database blockchain/smart contract services via the cloud - simply because they are scaleable. A material consideration if your proposed business application could easily generate 20,000 new blocks/month that need to process in seconds, versus < 1,000 new blocks/month that could take minutes/hours to process on a distributed ledger. You demonstrate your 'proof of concept' on Etherium (Distributed Ledger) - you implement it on IBM/SAP (Database), and do it 'in house'. Tuition wise, your time would be better spent looking at how this technology affects the operations of a business - versus whether X or Y is the better investment. UoT has a handy 2-day course in the subject ;) SD

You need to be very clear on WHY you're investing in this. In the long-term - a holding of Bitcoin is probably a worthwhile thing. You will have some wealth that is always portable, no matter what happens to you. You will also have experience in what will probably become a 'core' crypto coin (complete with futures & options markets). It does not mean buy it today. In the nearer term, Etherium will make you familiar with how blockchain smart contract solutions can be applied across many different applications - but Ether token is not a substitute for Etherium stock (it's private). The solutions are where the money is, and the beneficiaries are the companies applying them (some of which are public). The downside is that distributed ledger applications have scaling limitations. To 'make' wealth one concentrates - to 'preserve' wealth one diversifies. To 'make' wealth in this game, you need to be a partner in a JV building a blockchain smart contract solution. If that's part of the plan - Etherium is probably the better choice. Notable is that it cannot be decided by conventional investment 'metrics' They don't exist yet. SD

The ICO itself very likely wasn't illegal, simply because there are no real crypto laws to break at present. What was probably illegal were the statements made around it (FDIC insured bank, Visa, etc.), and the presence of a C-Suite individual on probation for felony theft. Can't claim the bank and pipes stuff until AFTER you've bought the bank. SD

Assuming e-Krone is a CBDC..... Every Swede or Swedish entity gets a digital wallet at the Riksbanken to hold their E-Krone. Same as every Swedish FI. Every Swede or Swedish entity will have a normal bank account from which they get cash. Cash and e-Krone freely exchange at 1:1, guaranteed by the Riksbanken. But ..... The Riksbanken ALSO provides a smart-contract writer recording transactions on a blockchain. Any Swede or Swedish entity can now transact with any other Swede or Swedish entity, in e-Krone, at zero cost. The state can now directly credit your Riksbanken wallet with benefit & pension payments, and you can directly pay your taxes and municipal fees from your Riksbanken wallet. No more credit or debit card charges, Riksbanken ability to trace a good chunk of all transactions in the Swedish economy (AML/ATF enhancements), and a significant reduction in transaction and fraud costs throughout the economy. Should the Riksbanken pay out a daily annualized 1% interest on all e-Krone that did not transact that day, every Swedish bank would now have to pay more than that to attract and retain a customer deposit; that will be lent out multiple times as interest bearing loans. The Riksbanken can now control the MINIMUM interest rate in Sweden (it sets it), the velocity of e-Krone (pay more interest & it slows), and the amount of lending (change the fractional reserve requirement). Very powerful, and largely NEW, monetary tools. The more corrupt or underground your economy (Russia, Israel) the better this works. The smaller your economy (Sweeden) the easier it is to implement. If you think this is great, there is very little not to love. If you're concerned about 'big brother' you would buy Bitcoin to store your wealth - but there will be a Riksbanken digital trace to your coin exchange buy/sell (even if you used an ATM). As other CB's do the same thing the underground 'space' contracts. concentrates into fewer and fewer portals - and becomes more 'containable'. Welcome to ONE of the 'new' worlds of banking. SD

Welcome to the CBDC - the real question is whether e-Krona will also have interest bearing possibilities (I-CBDC). We would suggest that the hangups are how interest on the token would affect the payments and banking system, how taxation on the token interest earned by non Swedes will be processed, and whether the token can be issued with interest switched 'off'. ie; At a rate of 0% but with staged integration. It isn't choice of technology, it's can it be integrated with what already exists - and how. SD

The major 'investables' are IBM - offering scaleable (DB) block chain on the cloud, and Etherium offering blockchain on a distributed ledger. Most of this is done via joint ventures, not using outside money. SD

I thought you first entry point was $7000 for bitcoin, why $500-1000? Why not $100 or $10? While I agree that a lot of money can be made playing the rallies or the busts, the lack of intrinsic value for any crypto currencies makes it hard to get entry or exit pointe for three tokens. There's no real entry 'price'. All you can do is try and guess if the current price is low enough to draw in sufficient numbers of bargain hunters, willing to drive the price up - in the belief that the current price is cheap. The entry point could just as easily be $5,000 or $10,000. Value investing is also quite good practice for it - as supposedly we are better at 'seeing' value where others do not. SD

No. You have to decide if you need the 'super security' of Bitcoin. If you do need it, pay up for the product offered - 'super security'. If you don't need it - why are you in Bitcoin? If Bitcoin is a 'investment', this is just the transaction fee. No different to the realtors commission when buying a house. SD

Rework the numbers when the value of the token is FALLING, and this falls apart rapidly. Even if you've paid for your rig, the incremental electricity cost of running it will exceed the value of the token earned. You would stop mining and enjoy some awesome video instead. We know that Bitcoin has long-term value, the market will be volatile, and that 'mania' is a limited term engagement. Perhaps the smartest thing is to simply sell it into the rallies, park the proceeds in treasuries, and buy it back < 500-1000? SD

USDT isn't backed by anything - if it were it would be fully exchangeable into fiat USD, on multiple exchanges. The fact that they have to give you a token (USDT) that is supposed to be the same as a fiat USD, versus the actual fiat USD, is hard evidence of that. You can give me fiat USD for a token, but you're never getting your fiat USD back - just another token. A matryoshka doll. SD

We have a similar issue with CAD/USD. There are times when CAD is clearly overvalued against USD, but they are maybe once/decade events. For us, once CAD starts getting > 85c we start moving to USD ADRs. Why 85c ? - it's just a number that has worked well for us. SD

Interesting. Based on your thoughts, I may give it a shot too. Just be mindful that today - much of the reason for selling you a rig; is because the seller expects to make MORE from you - than he would had he simply kept the rig, & mined for himself. It's OK for a hobby and experimentation, but it's not what it seems. Obviously, not a popular view among many! At the aggregate: 1) Only the fastest miner gets paid. New rigs are always faster than yours; meaning that over time you progressively earn less, and more & more of it is in less desirable token. Rigs have a short economic life. 2) Appearance of distributed security. The more rigs sold outside of the 'tech' community, the more diverse the aggregate mining network 'appears' to be, and the more real distributed security 'seems' to be. Problem is that its a 70% layer of very fast computers in mining consortia, and a 30% layer of much slower computers spread throughout the world, with hash rate controlled by degree of hash complexity. A small drop in complexity, and the faster computers win - erasing distributed security. 3) Capital cost downloading. Every utility downloads the capital cost of producing its product onto its customers, most often by the customer paying a 'debt service' charge on their bill every month. An alternative is to simply have the customer build their own generation facility (take on the capital cost) and buy their net output. See any difference between this and a mining rig? SD

This is really the bull case. If the economy for criminals, terrorists, tax evaders, and money launderers is large enough (and it is), some of these tokens might actually have value as currencies. But which token will become the fiat currency of the underworld? There is a pretty good chance it hasn't even been invented yet. Are we still at the Napster stage of digital currencies? This is why I don't think there will be a Fedcoin. If there is a Fedcoin then politics means that eventually the government drug dealer and terrorism ops will come out just like we are now finding out about ISIS. I think instead there will be private cryptos, some of them set up by intelligence agencies or their friends. It is part of the trend of changing from the public wave to the private wave. When computers record everything it is no longer possible to have big government with big secrets. It will be much safer to have small government and big secrets hidden among millions of private companies. The beauty of the Bitcoin is that nobody could possibly have come up with a better 'store of value' for the underground economy; and the more distrusted 'big brother' is, the better this works! (the libertarian dream). The more 'mainstream' it becomes, the more valuable it becomes as well - as the greater variety and quantity of 'scum' produce network effects. http://www.starwars.com/video/my-kind-of-scum. The more obvious 'containment' is the creation of ONE single direct CB competitor to Bitcoin, that 'rules them all' (other private currencies). Fearless and inventive! SD

This is really the bull case. If the economy for criminals, terrorists, tax evaders, and money launderers is large enough (and it is), some of these tokens might actually have value as currencies. But which token will become the fiat currency of the underworld? There is a pretty good chance it hasn't even been invented yet. Are we still at the Napster stage of digital currencies? Amusingly they have the same problem as you and I. You and I know that the fiat currency in our hand is devaluing all the time - because more bills are being printed. The underground can only buy certain currencies, but if the price of those currencies keeps falling over time - their holdings become worth less and less. 'Devaluation' by another means. SD

The HD wallets like Jaxx follow a standard. You can take your 12 word backup phrase from your Jaxx wallet and restore it on Exodus for example. Also you can list all of the private keys in Jaxx and write them down and restore them on any wallet software. Your Jaxx and wallets like it interact with the blockchain, but they don't store your Bitcoin. Your Bitcoin lives on the blockchain and any software can be used to access them. Jaxx can disappear tomorrow and I would not lose any of the Bitcoin that I have stored in my Jaxx wallet. The particular software you use to view your bitcoins or to spend them doesn't matter. What matters, and the only thing that matters, is that you know either your 12 word backup phrase or all of your private keys. The smartest thing you can do with these is write your code on a slip of paper, store it in your safety deposit box, and ensure that you clear your browser every time you finish accessing your digital wallet. The easiest way to steal token is to simply read (electronically) your device, the easiest way to do that is via malware you've accidentally downloaded. SD

Read from around page 12 onwards. The inference is only buy in a collapse, only buy Bitcoin, and it'll be your kids who collect https://s3.eu-west-2.amazonaws.com/john-pfeffer/An+Investor%27s+Take+on+Cryptoassets+v6.pdf SD

Is this correct ??? https://blockchain.info/pools?timespan=4days The big ones are mining pools, some have tens of thousands of members each of whom can switch pools or start mining on their own with a couple of keystrokes. They also all know each other. Distributed 'security' as advertised doesn't really exist; you're really relying on 'inertia' and self interest ( the fact that the 'craze' is worth much more to everyone if nobody screws the pooch, and the 'ethos' that you don't take your money out). Nothing wrong in that (everyone eventually grows up), but it's a different way of thinking. SD

It's useful to take a page from the project managers playbook, where 'potential' projects are rated red, yellow, green. Red being low probability or distant; green being the reverse. EV's would be red, tending to yellow. There is also cyclical versus disruption. Trump canceling NAFTA is cyclical; NA integrated auto producers would take an immediate and hard hit, local unemployment levels would spiral, current leaders would be replaced in the next political cycle, leading to implementation of NAFTA2. Automating the plants and warehouses with 90% robotics is disruptive, as the jobs are never coming back. An investor would either go long the robotics immediately, or long auto producers 2 years after NAFTA withdrawal (after the bankruptcy's have already happened). Marketers refer to 'product life cycle', industries are similar. Time on the 'X' axis is just replaced with 'innovation'. Incorporating the small innovations will improve your product and extend its life cycle; the big innovations rapidly put you out of business (motor car replacing the horse and buggy). The take-away's here are be strategic, and be patient. Which very few will do in today's age of instant gratification. SD

Do you have any thoughts on the energy consumption and transaction speed (7-10 per second) that are often cited as reasons that blockchain will not be able to scale? More specifically, is it possible for blockchain to achieve mass adoption for various use cases with those two hindrances core to the protocol? Thanks A blockchain will run on EITHER a database OR a distributed ledger. 95% of applications do not need the distributed ledger. Furthermore; energy consumption, and slow transaction speed, is only an issue for the distributed ledger. There are no scale issues with databases, and they are used extensively in the D5 nations where scaled blockchain solutions are widespread. The simplest analogy is to look at the manufacturing supply chain. Pre-blockchain we used an ERP system running on a database, and it served our functional requirements very well. Blockchain on a database would just address the functionality in a different way, but with about the same transaction speed. Blockchain on a distributed ledger would also do the same thing, but it would make each transaction 'super secure' at the cost of a major reduction in processing speed. Most folks would argue that the value proposition doesn't warrant it, and that the customer would not pay for the 'super security'. Therefore no distributed ledger. Smart contracts run 'on top of' both databases and distributed ledgers. The manufacturer just needs to set up as the Oracle, provide a smart contract writer, list their product via customized offers, and integrate it with their existing ERP system, and collection facilities. As soon as 'offer' becomes 'contract' - either manufacturing commences, or inventory flows out the warehouse against guaranteed payment - with most of the 'back office' processing eliminated. When you're working on JIT, you cant afford the uncertainty as to whether it might take 10 minutes or 7 hours+ for a miner to verify your block on a distributed ledger. Therefore no distributed ledger. Needles to say 'not popular among the developer community'. SD

That's part of it yes. But also TD is more focused and has better risk management. Until a couple of years ago they had a great CEO which didn't hurt either. Generally you'll see all around the world that retail banks with good risk management tend to outperform. .... Also because both TD and RBC are paid up partners of the R3 Consortium - with ownership access to the pipes of the blockchain based Corda ledger. They will not be doing anything 'stupid' under OSFIs oversight, and how they 'do'/'report' will give some insight as to how the technology will be implemented. SD