Cryptocurrencies

[clutch]

magnetic 0´s and 1's sitting on some server electrons, protons, and neutrons arranged in some particular manner.

 

Though frankly you could also describe Berkshire that way.

 

Hence the fallacy of dismissing the value of any entity based on it's physical make-up.

[rkbabang]

magnetic 0´s and 1's sitting on some server electrons, protons, and neutrons arranged in some particular manner.

 

Though frankly you could also describe Berkshire that way.

 

Hence the fallacy of dismissing the value of any entity based on it's physical make-up.

 

All fermions matter!

[Liberty]

It's quarks all the way down.

[DeepSouth]

"Look, you don't have to be a fan but continuing to share your opinion on something you very obviously do not understand (or wish to understand) derails a legitimate thread."

 

You are right, it would be a shame to derail a thread by some who have outsmarted Buffett, Munger, Dimon, Shiller and so many others... LOL!

 

So we will let you live your mania. Let you enjoy this Libertarian euphoria over magnetic 0´s and 1's sitting on some server.

 

Cardboard

 

Some server?  ::) This is what I meant with talking about something you don't comprehend in the slightest.

 

This is rich coming from the poster who spews completely uninformed and error-ridden comments about the stability of the pre-Federal Reserve economy and believes there have been 20+ year recessions in the US in the last hundred years.

[SnarkyPuppy]

"Look, you don't have to be a fan but continuing to share your opinion on something you very obviously do not understand (or wish to understand) derails a legitimate thread."

 

You are right, it would be a shame to derail a thread by some who have outsmarted Buffett, Munger, Dimon, Shiller and so many others... LOL!

 

So we will let you live your mania. Let you enjoy this Libertarian euphoria over magnetic 0´s and 1's sitting on some server.

 

Cardboard

 

Some server?  ::) This is what I meant with talking about something you don't comprehend in the slightest.

 

This is rich coming from the poster who spews completely uninformed and error-ridden comments about the stability of the pre-Federal Reserve economy and believes there have been 20+ year recessions in the US in the last hundred years.

 

Even if true, it doesn't negate the validity of the criticism that thinking bitcoin is hosted on a server is willful ignorance

[rkbabang]

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!

 

Yeah, this is a good warning, SD.  In my case, I bought a PC in September because my old one was 7 years old, slow, and getting BSOD every few days.  I got a better graphics card than I would have otherwise--maybe an incremental cost of $300--so I could mine effectively. Normally my computer is on whenever I'm awake, so the incremental cost of electricity is low.

 

I don't know if it was a good decision, but seemed like a reasonable gamble in that $300 isn't that much money to me and I've enjoyed doing it.  Economically, it has paid off, returning about $600 so far. Of course, that's just an outcome that says little about whether the decision to buy the better card had a positive expected return.  Even if one happens to win at roulette, it doesn't imply it was a smart decision to play.

 

 

Another way to look at it is that if you would have bought $300 worth of Bitcoin in September at $3800 (it traded as low as $3500 in september) your bitcoin would be worth around $850 right now at bitcoin $10,630.00.  You actually lost $250.  This is why I have never bought hardware to mine.  With the rising prices and rising difficulty it doesn't usually make sense to mine rather than purchase the coins outright unless you already own the hardware for other reasons.

 

 

 

[RichardGibbons]

Another way to look at it is that if you would have bought $300 worth of Bitcoin in September at $3800 (it traded as low as $3500 in september) your bitcoin would be worth around $850 right now at bitcoin $10,630.00.  You actually lost $250.  This is why I have never bought hardware to mine.  With the rising prices and rising difficulty it doesn't usually make sense to mine rather than purchase the coins outright unless you already own the hardware for other reasons.

 

Putting aside the entertainment from mining and the (non-mining) utility of a good graphics card, this still isn't the sort of reasoning I use because it's difficult to predict what will happen with security prices in the short term.

 

For instance, based on this reasoning, it doesn't make any sense to have bought Bitcoin in September because you could have just bought Ripple in September at $0.171, and it's currently at $1.185.  So, for every $300 of bitcoin you've held since then, you've lost $1,228. And you'd have done even better if you'd just bet it all on black 11 on the roulette wheel just before it came up.

 

Deciding whether a short-term bet on volatile securities was a good decision based on the outcome is usually a mistake, I think.  Particularly if you allow the outcome to influence your emotions or future decision-making. (Like, what are you going to do today with the information that Ripple greatly outperformed Bitcoin over the last 3 months? Based on your "you shouldn't have bought a card, you should have bought bitcoin" reasoning, you're probably now required to sell all your bitcoins to buy ripple.  :) )

[RichardGibbons]

Hmm, I guess the other factor is the residual value of the card. Right now, there's bids of $530 for it on eBay, so that closes the gap even more.  If I sell the card and get something $300 cheaper (to completely reverse the cryptocurrency part of the purchase), then by your math, I've actually come out ahead compared to buying bitcoin.

 

That's surprising to me.  Like you, I would have thought that, over this period of time with the big bitcoin appreciation, bitcoin would've been way ahead of my mining.  I don't think it makes the decision good or bad, but it is interesting.

[SharperDingaan]

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

[Liberty]

https://medium.com/@bitfinexed/latest

 

https://twitter.com/Bitfinexed/

[RichardGibbons]

Rework the numbers when the value of the token is FALLING, and this falls apart rapidly.

 

I agree completely.  That's why it's entertainment, not an attempt to get rich.  It literally isn't worth my time to mine, and it also isn't worth my time to take the money I've put into mining and invest it elsewhere because the amounts we're discussing are negligible.  It's only worthwhile doing because I get entertainment from it. When I stop getting entertained by it, I'll stop.

 

The electricity cost is interesting in that my electricity usage has gone down year over year since I started doing this.  My only hypothesis for why that would happen is because I replaced my PC and monitor, and current technology is significantly more efficient than the old.

[Aberhound]

Some tokens are interesting as they will affect the underlying industry and stock prices. One such token is DENT. I expect the token to lock in the duopolies in both US and Mexico then elsewhere. If you ever doubted the elite support the crypto economy read about this token. Notice it launches in US and Mexico now with Verizon & ATT and America Movil and Telefonica. Go long the duopoly and short the competitors.

 

The token has obvious network effects as no one will want a weak token. Mobile data is going to become very cheap and instead the duopoly will charge monthly flat fees to access the network. This make the duopoly network more valuable so wipes out the competitors. So in Canada the contract will go to Bell and Rogers.

 

So getting the app is a no brainer. The trick though will be to consider that the duopolies have high prices so I doubt you will be able to buy the tokens and use them to save money. Instead you have to understand that airtime is a wasting asset. What will happen is the poor will sell their airtime so data prices will drop. So the play will be to get in at the start when for the first time the poor masses can sell their data. They will and prices will plummet as the poor masses care about a few pennies and the rich don't care. Therefore there is massive excess selling pressure.

 

Remember Carlos Slim is on the other side of this coin. He is getting the poor masses to drop the data prices at their expense to attract users to his networks so he can charge high access fee. This increases the value of America Movil. Data in Mexico will be sold more cheaply because of poverty so that will be the source of the supply of airtime. Think Rockfeller taking over the oil industry by dropping prices. Data will be available at prices which will bankrupt competing mobile operators.

 

Brilliant.

 

[Liberty]

[EricSchleien]

Munger said people will just make more bitcoin. However, I was under the impression it's set up so that can't happen. Can someone who understands this better than me explain whether Charlie is right or wrong and why?

 

Thanks

[DTEJD1997]

Hey all:

 

There is some crazy stuff going on bitcoin & crypto-currency mining.

 

Demand for graphics cards & certain other parts has just gone insane.  I use low end & medium end graphics cards from time to time for various projects...One of my customers asked if I could get any higher end stuff..which I could.  He started buying wildly.  I then noticed that you could buy a $500 graphics card and sell it instantly on Ebay for $750!  BINGO! I have good access to wholesalers and started selling stuff right & left.  This went on for about 2 weeks.  Then the outages at wholesalers hit...I was able to get stuff as I buy a lot of other stuff, so I got priority...then a week ago, wholesaler raised prices of graphics cards across the board.  In some cases, prices have tripled.  $500 graphics cards are now $1,500!!!!!

 

So now I'm out of the lop...but $150-$200 cards which I need from time to time are now $300 to $500.  So now I can't make any money on certain things, as I can't get components for reasonable prices.  My clients aren't crypto-mining, so they can't pay that much more.

 

So if I am hurting, I wonder what is going on with smaller PC manufacturers/assemblers?  I bet Apple & Dell can get product...but anybody else might have difficulty.

 

What about the card manufacturers making more cards?  They are trying their best, BUT they got burned the last time with crypto-currency mining.  Word on the street is that they are not going to make any significant expansion and users will just have to learn to deal with shortages & higher prices.

 

 

[wachtwoord]

Essentially the transaction speed of bitcoin is super slow and there will be newer ways to do better.

 

That is bullshit. The transactions speed is very high but you need to offer a sufficiently high fee to be taken up in the next block. If you pay less you'll need to wait your turn.

 

But the other cryptos are no solution because your transaction might be included cheaper in the next block, the level of security, censorship resistance and distribution of the network is orders of magnitudes lower.

 

There's no such thing as free lunch and you need to pay up. If you do Bitcoin is faster than any of them.

[writser]

So you either have to pay a shitload or your transaction takes ages. Doesn't sound like much of an improvement over existing systems but what do I know.

[SharperDingaan]

So you either have to pay a shitload or your transaction takes ages. Doesn't sound like much of an improvement over existing systems but what do I know.

 

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

 

 

 

[no_free_lunch]

Munger said people will just make more bitcoin. However, I was under the impression it's set up so that can't happen. Can someone who understands this better than me explain whether Charlie is right or wrong and why?

 

Thanks

 

This comes up a lot.  Basically you cannot make more true bitcoin unless the majority of miners agree to it.  I think it is unlikely they would agree to increase the supply as it would likely crash the value of bitcoin.  Historically the miners can't even agree to make changes which are widely considered improvements such as increasing the size of the blocks.

 

I think what Munger is saying is that you can make different versions of bitcoin, which obviously has happened.  Ethereum, Ripple (sort of), ADA, bitcoin forks, etc.  However, these things are only as secure as the number of miners.  The more miners the harder it is to corner the market.  Given this, I see it coming down to a small number of crypto's with the largest user networks.

 

Who knows with technology but I think bitcoin will remain one of the dominant crypto's and the 21M bitcoin limit will remain intact if for no other reason than the stubborn behavior of the community.

[DeepSouth]

So you either have to pay a shitload or your transaction takes ages. Doesn't sound like much of an improvement over existing systems but what do I know.

 

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

 

Couldn't Xi Jingping destroy bitcoin's security by nationalizing all Chinese mining power?

[rkbabang]

So you either have to pay a shitload or your transaction takes ages. Doesn't sound like much of an improvement over existing systems but what do I know.

 

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

 

Couldn't Xi Jingping destroy bitcoin's security by nationalizing all Chinese mining power?

 

Nation states have huge piles of money and weapons and often do crazy destructive things.  So while the answer to that is yes.  I think that would only serve to destroy bitcoin rather than control it.  People would move on to another cryptocurrency if they did that as no one wants a cryptocurrency controlled by any nation state not just China.

 

[gary17]

Pardon my ignorance — but the slow transaction of bitcoin — can that not be improved over time with faster processors / chips?  That is a computer problem is it not? just like how internet was slow 20 years ago?

[DeepSouth]

So you either have to pay a shitload or your transaction takes ages. Doesn't sound like much of an improvement over existing systems but what do I know.

 

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

 

Couldn't Xi Jingping destroy bitcoin's security by nationalizing all Chinese mining power?

 

Nation states have huge piles of money and weapons and often do crazy destructive things.  So while the answer to that is yes.  I think that would only serve to destroy bitcoin rather than control it.  People would move on to another cryptocurrency if they did that as no one wants a cryptocurrency controlled by any nation state not just China.

 

So instead of being a trustless protocol, bitcoin's existence relies on placing your complete trust that an authoritarian dictator doesn't won't ever decide to destroy it. I thought the key selling point of this was that crypto holders don't trust government?

 

So we sacrifice speed or cost of transactions in order to gain security, but it's not that secure for the average man on the street who doesn't understand all the steps to ensure their private key isn't hacked and on a protocol basis it's not secure because it could be destroyed by a single memo from the Chinese politburo.

 

I'll readily admit I'm not an expert but the cost/benefit of that asset over gold, TIPS, T-bills, etc seems pretty shoddy. I'm long and I've realized solid gains because most of the zealots seem to have a religious devotion to it therefore the flow of funds should be bullish, but it's hard for me to really understand the appeal.

[wachtwoord]

Pardon my ignorance — but the slow transaction of bitcoin — can that not be improved over time with faster processors / chips?  That is a computer problem is it not? just like how internet was slow 20 years ago?

 

No. Processor speed is not the limitation here. The cause is economical rather than technical. To provide security without the need for third party trust the cost needs to be sufficiently high. This is only achieved through limiting the resource (throughput). Simple supply and demand.

[rkbabang]

So you either have to pay a shitload or your transaction takes ages. Doesn't sound like much of an improvement over existing systems but what do I know.

 

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

 

Couldn't Xi Jingping destroy bitcoin's security by nationalizing all Chinese mining power?

 

Nation states have huge piles of money and weapons and often do crazy destructive things.  So while the answer to that is yes.  I think that would only serve to destroy bitcoin rather than control it.  People would move on to another cryptocurrency if they did that as no one wants a cryptocurrency controlled by any nation state not just China.

 

So instead of being a trustless protocol, bitcoin's existence relies on placing your complete trust that an authoritarian dictator doesn't won't ever decide to destroy it. I thought the key selling point of this was that crypto holders don't trust government?

 

So we sacrifice speed or cost of transactions in order to gain security, but it's not that secure for the average man on the street who doesn't understand all the steps to ensure their private key isn't hacked and on a protocol basis it's not secure because it could be destroyed by a single memo from the Chinese politburo.

 

I'll readily admit I'm not an expert but the cost/benefit of that asset over gold, TIPS, T-bills, etc seems pretty shoddy. I'm long and I've realized solid gains because most of the zealots seem to have a religious devotion to it therefore the flow of funds should be bullish, but it's hard for me to really understand the appeal.

 

It would cost a fortune (even for a nation state) to do this and because the target would be destroyed in the process, nothing would be accomplished.    Of course those exact words could describe the US foreign policy so who knows?

 

I expect to see central banks eventually adding BTC to their reserves along side gold, not trying to destroy it.