Cryptocurrencies

[SnarkyPuppy]

rkbabang - thanks for your insight, definitely learning a lot observing your posts. 

 

Have you looked into ZCash?  JPmorgan just did a deal with the founders (http://www.coindesk.com/jpmorgan-partners-zcash-team-add-enterprise-security/).  Also, Naval Ravikant (https://www.farnamstreetblog.com/wp-content/uploads/2017/02/Naval-Ravikant-TKP.pdf) has publicly talked about having a position in ZCash. 

 

Curious if you have any thoughts/if you own?

 

Zcash has been on my list to look further into, but so far I haven't.  There are so many interesting projects out there that there isn't enough time to look into them all.  Bytecoin is another one and I just heard about EOS recently which looks interesting too https://steemit.com/@eosio

I really like the article Liberty posted above: https://stratechery.com/2017/tulips-myths-and-cryptocurrencies/

I think that if this is a bubble it is more analogous to the late 90s internet bubble.  A lot of development, a lot of money poured into a lot of different ideas, but most of them will fail.  It is probably too early to know which ones will be the Amazon.com's or the Ebay's and which ones are the pets.com or the Netscape's. 

 

I only own Ethereum(ETH), bitcoin(BTC), Monero(XMR), & Dash(DASH).  And that is the order from my largest holding to my smallest at today's prices.

 

Thanks

[rkbabang]

Fidelity to allow clients to see digital currencies on website

 

[SharperDingaan]

Aren't these cryptocurrencies inflationary? As I understand that it, mining these cryptocurrencies does not create any real value, so basically, a fan cryptocurrency  has a value, this means that the value of the currency we currently own is devalued. Right now, the total value of the crypto currency creates an s probably still too small to matter, but if it becomes significant, there should be an inflationary impact on the economies.

 

I also think that the government eventually will crack down on this for above reason and the ease to use it for money laundry. Sure, the government mayn't be able to control who owns it or who uses it, but if they make the use of he cryptocurrency unlawful, then the cryptocurrency would become a Mafia currency of some sort and be worth far less for most of us.

 

I think it is just a matter of time when this get regulated to some extend. This is now like the "Wild West", but eventually, the Wild West was ruled by law as well.

 

The experience to date suggests that cryptocurrency is not inflationary. Given that very little cryptocurrency is actually accepted for payment purposes, & those that are (ie: Bitcoin) don’t transact very much – that’s not unreasonable.

 

The broader problem is the inflation metric itself – quantity of money/goods available, usually measured as an ‘M’ number, divided by GDP. Where’s everything (flight, hotel, meals, etc.) you bought using loyalty points?  (ie Visa, Aeroplan, Airmiles, Car Rentals, Travelocity, Uber, airBnB, etc.) – all of which is just another type of cryptocurrency. If the ‘M’ isn’t capturing it, the official inflation rate may well be understating by a good 25-35bp. 

 

Central banks are heavily involved in cryptocurrency, and it will ultimately be regulated by central banks – with everything linked to the internet of things (IoT). Anything not on the IoT essentially being unusable for most purposes - because it doesn’t have a blockchain history.

 

SD

 

Had some interesting discussions around this …

 

Assume you draw $1000 from your bank account to buy a plane ride + ability to earn travel points.  Were travel points not part of the deal you would only have paid $909. Hence buying those points created 10% inflation (1000/909) at the time you bought the plane ticket …. & offsetting deflation at the time you used the points to pay for your next plane ride.

 

So long as more points are created than are redeemed we inflate – hence the expectation that cryptocurrency is inflationary. But if we generally collectively redeem points when we aren’t flush (ie: in a down-turn) – they are deflationary, and it’s on top of the down-turn related asset deflation. All else equal, we end up with higher highs and lower lows.

 

So .. we really don’t know what happens - but it’s highly likely that it adds to volatility.

Not about to test a central banker on it!

 

SD 

 

[CONeal]

"Ethereum could be meaningful, when Goldman and JPM et al formed the Enterprise Ethereum Alliance I knew this was the one "alt-coin" to take a flyer on and my first tranche is a 10x. How often does that happen? (I should have bet it EVERYTHING I had! Just kidding). I just knew that with GS and JPM involved it was going to separate from the pack of altcoins. That said, I still haven't seen an actual application that's very far beyond the crypto-currency / blockchain / smart contract equiv. of "hello world" running on ethereum."

 

 

Have looked at Cryptocurrency and played around with it for a few hours.  And it keeps bringing me back to the statement above that I just can't figure out. 

 

The Enterprise Ethereum Alliance is now up to 86 members with the sole focus of working on blockchain technology.  The companies in the alliance are not all banks and crytocurrency companies as now Samsung is also a member.  If you take away the perceived value of a blockchain currently being assigned (cryptocurrency).

 

What are the benefits of a blockchain and how could it be used?  Is this just a piece of code to securely wrap around money transfers, so they are not hacked or is the intent to use a blockchain for some other reason that could provide some other type of benefit.  Guess I'm just not understanding why this blockchain technology is being as highly touted as it currently is. 

 

I understand that this is suppose to be a more secure method for example, only specific people being able to see a classified file.  How is this different and more beneficial then say password protecting an Excel file so that only the people that should have access has the password to actually see it.  Or another example, encrypting a password protected file that contains names and addresses of customers.  The data is already being sent over in a secure manner.  How would a blockchain be any better?

 

[meiroy]

CONeal,

 

Watch this:

 

Then this:

[CONeal]

CONeal,

 

Watch this:

 

Then this:

 

Ahh, thanks for those videos.  Now beginning to see how this could be used for places like a hospital.  Gives me a completely different perspective of what is going on.

 

Am I correct with the following statement?  Don't focus on the cryptocurrency value attached to to the blockchain technology.  Focus on the specific blockchain technology and what it's intended to do.  The release of cryptocurrency is more or less a test of the validity of the underlying blockchain technology.  Companies will then use the underlying technology (the blockchain copy) for their intended use.

[wachtwoord]

A blockchain has no value without the monetary aspect because there is no incentive to secure it without it. The tokens on a blockchain need to have value (so yes bitcoin is by far the most interesting one, by several orders of magnitude).

[meiroy]

CONeal,

 

Watch this:

 

Then this:

 

Ahh, thanks for those videos.  Now beginning to see how this could be used for places like a hospital.  Gives me a completely different perspective of what is going on.

 

Am I correct with the following statement?  Don't focus on the cryptocurrency value attached to to the blockchain technology.  Focus on the specific blockchain technology and what it's intended to do.  The release of cryptocurrency is more or less a test of the validity of the underlying blockchain technology.  Companies will then use the underlying technology (the blockchain copy) for their intended use.

CONeal,

 

Watch this:

 

Then this:

 

Ahh, thanks for those videos.  Now beginning to see how this could be used for places like a hospital.  Gives me a completely different perspective of what is going on.

 

Am I correct with the following statement?  Don't focus on the cryptocurrency value attached to to the blockchain technology.  Focus on the specific blockchain technology and what it's intended to do.  The release of cryptocurrency is more or less a test of the validity of the underlying blockchain technology.  Companies will then use the underlying technology (the blockchain copy) for their intended use.

 

Blockchain finance is one of the applications of the blockchain.  You can google "blockchain applications" to read more about the various uses.

 

 

[rkbabang]

I found these articles informing.  One question I had was why do these apps lately all seem to be issuing their own tokens on top of the Ethereum blockchain rather than using Ether directly in their apps.  It is a way to raise money around US securities law.  That is why they issue a token rather than a share of equity.

 

From: The difference between App Coins and Protocol Tokens

 

"Unfortunately due to securities regulations it is difficult for dApp developers to raise money on the blockchain through a public sale of unregistered securities. So while equity app coins might provide the most logical incentives for both dApp developers and investors alike, it is currently too risky to structure app coins in this way. That being said, public crowd sales are an irresistible source of funding for dApp developers and with traditional venture capital firms just starting to dip their feet into the world of digital assets, there aren’t many reliable alternatives."

 

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And from: A beginner’s guide to Ethereum tokens

 

width=606https://cdn-images-1.medium.com/max/1200/1*fG1euKN8v0-Q32gWGPuihA.png[/img]

 

[rkbabang]

I found these articles informing.  One question I had was why do these apps lately all seem to be issuing their own tokens on top of the Ethereum blockchain rather than using Ether directly in their apps.  It is a way to raise money around US securities law.  That is why they issue a token rather than a share of equity.

 

From: The difference between App Coins and Protocol Tokens

 

"Unfortunately due to securities regulations it is difficult for dApp developers to raise money on the blockchain through a public sale of unregistered securities. So while equity app coins might provide the most logical incentives for both dApp developers and investors alike, it is currently too risky to structure app coins in this way. That being said, public crowd sales are an irresistible source of funding for dApp developers and with traditional venture capital firms just starting to dip their feet into the world of digital assets, there aren’t many reliable alternatives."

 

------

 

 

And from: A beginner’s guide to Ethereum tokens

 

width=606https://cdn-images-1.medium.com/max/1200/1*fG1euKN8v0-Q32gWGPuihA.png[/img]

 

 

 

I was just thinking about how this would work in an unregulated market?  These companies would design their apps to use Ether directly inside their apps, but raise money by issuing tokens on the blockchain which represented an equity share of the company.  These tokens would act just like stock does, but traded as easily as a cryptocurrency. They could be traded on the blockchain exchanges, they could be traded directly from person to person outside of an exchange, the company could issue "dividends" in Ether to token holders, the company could buy back tokens, or do secondary offerings to raise more capital.  Even non-tech companies could "go public" by issuing equity tokens on the Ethereum blockchain fairly easily.  These tokens would have an intrinsic value in the same way that stock does today, because they would represent shares in the company.  Of course since anyone could participate in these ICO events anonymously from anywhere in the world, this would be a legal nightmare in our current regulatory environment.

 

[PLynchJr]

Interesting discussion here.  One thing I don't understand about Bitcoin is what happens after 2040?  From my understanding there is a hard cap of 21 million Bitcoins with the last ones being produced in 2040.  Why would people continue to mine / verify transactions after 2040 if there is no financial reward?

[rkbabang]

Interesting discussion here.  One thing I don't understand about Bitcoin is what happens after 2040?  From my understanding there is a hard cap of 21 million Bitcoins with the last ones being produced in 2040.  Why would people continue to mine / verify transactions after 2040 if there is no financial reward?

 

There would still be a mining reward, which would come out of the transaction fees alone.  Also the date is 2140 not 2040, the likelihood of bitcoin still existing in exactly its current form without being hard forked into something different at least once along the way, and it still being the dominant cryptocurrency, 123 years from now seems slim to me.

 

[rkbabang]

A blockchain has no value without the monetary aspect because there is no incentive to secure it without it. The tokens on a blockchain need to have value (so yes bitcoin is by far the most interesting one, by several orders of magnitude).

 

I disagree, with your second point, not your first.  Yes a blockchain needs a token to give incentive to secure it, but I don't see bitcoin as the clear winner.  I'm leaning more toward Ethereum now, and not just because it has grown to be my largest crypto holding (by a factor of almost 2 now), but because it has a road-map which includes privacy changes and it is more functional being turing complete.  The Bitcoin community can't even get together to fix the blocksize issues and other scalability problems.  Right now I think BTC is surging because it is the gateway currency, i.e. the easiest way to acquire the others is to get BTC and then exchange it on an exchange or with shapeshift, etc.  Coinbase is the only way that I'm aware of to acquire ETH or LTC with US dollars directly and I am not aware of a way to buy any of the other altcoins except with BTC.  I have a feeling that will change rather quickly.  You will see ETH ATMs and other ways as ETH becomes more popular.

 

The Rise of Ethereum (http://www.nasdaq.com/article/the-rise-of-ethereum-cm794082):

 

"Over the years, Ethereum has garnered admiration and evoked immense interest across enterprises. Accenture observes, “Every self-respecting innovation lab is running and experimenting with Ethereum, including IBM, Microsoft, JP Morgan, and the R3 consortium.”

 

Ethereum is supported by Microsoft Azure and Alibaba Cloud to encourage innovation and adoption of the technology. However, the efforts remained scattered until the formation of the Ethereum Enterprise Alliance (EEA) in 2017.

 

The EEA brings together enterprises, startups, academics, technology vendors, and experts to work on Ethereum as an enterprise-grade technology. Its founding members include names like Microsoft, Credit Suisse, Intel, JP Morgan, UBS, Santander, ING, CME Group, BNY Mellon, Accenture, and Wipro. Some of these names (such as Microsoft, JP Morgan, and Santander) have been actively involved in exploring the blockchain technology in the recent years, while others are looking at becoming a part of the revolution that’s underway.

 

Microsoft believes that Ethereum is “evolving to address the needs of enterprises globally. Focusing on requirements like privacy, permissions and a pluggable architecture while retaining its public roots, Ethereum continues to widen the scope of what developers, businesses and consortiums can achieve.”

 

During Consensus 2017, Ethereum Enterprise Alliance added another 86 members—taking the total count to 116. EEA now represents well-known names from across different regions and industries, such as Mitsubishi UFJ, DTCC, Deloitte, Samsung SDS, Infosys, Toyota Research Institute, National Bank of Canada and Merck KGaA, among others."

 

 

 

[rkbabang]

The price of many cryptocurrencies continues to move way up, they have been on a tear all week.

https://coinmarketcap.com/all/views/all/#USD

 

Bitcoin now has a >$25B marketcap and Ether >$8B.  There are 4 cryptocurrencies with marketcaps above $1B, 13 above $100M, and ~185 of them above $1M

 

Since I wrote this 21 days ago, Bitcoin now has a $45B marketcap and Ether $19B.  There are 7 with caps >$1B, 31 above $100M, and 250 above $1M.

 

The total space is over $90B.

 

[jb85]

91B is still only 91B/60T = 0.15% of world wide M2 currency

 

 

[rkbabang]

91B is still only 91B/60T = 0.15% of world wide M2 currency

 

So if you think this will represent 2% there is still a lot of growth left.  If you think it will be 15%, or 51%, or 80% there is a hell of lot of growth left.  :)

 

[jb85]

91B is still only 91B/60T = 0.15% of world wide M2 currency

 

So if you think this will represent 2% there is still a lot of growth left.  If you think it will be 15%, or 51%, or 80% there is a hell of lot of growth left.  :)

 

Exactly. If you think there is any value at all, either as currency or store of value, then even at present prices, crypto in general is one of the most asymmetric bets of all time.

 

I can understand people saying bitcoin will go to zero. What I find odd is when people say the fair value is 50b to 100b.  Your basically saying it should be exactly 1% of world money supply which seems oddly specific

[rkbabang]

91B is still only 91B/60T = 0.15% of world wide M2 currency

 

So if you think this will represent 2% there is still a lot of growth left.  If you think it will be 15%, or 51%, or 80% there is a hell of lot of growth left.  :)

 

Exactly. If you think there is any value at all, either as currency or store of value, then even at present prices, crypto in general is one of the most asymmetric bets of all time.

 

I can understand people saying bitcoin will go to zero. What I find odd is when people say the fair value is 50b to 100b.  Your basically saying it should be exactly 1% of world money supply which seems oddly specific

 

+1.  I agree.  It is either wildly undervalued or not worth anything.

 

80% would shock me, but I expect that 10-20%+ of all the world's economic transactions will take place on blockchains within the next 15-20 years. Although I suspect my prediction will prove to be grossly inaccurate in one direction or the other.

 

[CONeal]

Found this article where the DTCC had a successful proof of concept test for derivatives.  Plan on rolling out the technology in phases beginning in 2018.

 

http://www.coindesk.com/11-trillion-bet-dtcc-clear-derivatives-blockchain-tech/

[DTEJD1997]

Hey all:

 

I hate to be contrarian...but could the recent spike in the value of Bitcoin be related to two things?

 

A). people in China looking to get some of their capital out the country/renminbi?

 

B). a spike in demand for Bitcoin due to demand from ransonware?  I have an elderly friend of the family who was looking to get bitcoin as their computer had been locked up.

 

I have no doubt that Bitcoin/cryptocurrencies could be very valuable.  It sure would be nice to easily move $$$ across political boundaries...to have no counter party risk, etc.

 

I just think that the recent spike might be the result of abnormal factors that are likely to prove temporary.

[rkbabang]

Hey all:

 

I hate to be contrarian...but could the recent spike in the value of Bitcoin be related to two things?

 

A). people in China looking to get some of their capital out the country/renminbi?

 

B). a spike in demand for Bitcoin due to demand from ransonware?  I have an elderly friend of the family who was looking to get bitcoin as their computer had been locked up.

 

I have no doubt that Bitcoin/cryptocurrencies could be very valuable.  It sure would be nice to easily move $$$ across political boundaries...to have no counter party risk, etc.

 

I just think that the recent spike might be the result of abnormal factors that are likely to prove temporary.

 

I don't see how your views are contrarian at all.  The value of these things is completely speculative at this point.  I've never seen anyone dispute that.  Even the most ardent supporters and evangelists are talking about what blockchain technology could become not what it is already.  Right now these things are used very little by very few, other than for speculation purposes.  As JB85 said above it is an asymmetric bet. That is why I took a small amount of money and purchased a basket of them.  That small amount has already become a measurable position in my portfolio, but I also understand that this is a speculative bubble and it will likely crash back down soon.  ETH is still flying high, but BTC is already down significantly off its recent high.

 

[Sleepwell]

Has anyone looked into potentially profiting from the current spread between the bitcoin ETF (GBTC) and bitcoin? The ETF is trading at a 100% premium to NAV, seems to me like a no brainer trade to put on (long Bitcoin/Short ETF), but not sure which brokerages let you short the ETF since it's OTC. Looking at the historical spread it seems to get out of whack every now and then and then come back to earth.

 

Any thoughts appreciated.

 

Credits to Barron's article over the weekend which mentioned this.

 

http://www.barrons.com/articles/bitcoin-and-tech-stocks-a-21st-century-tulipmania-1495858829

[CONeal]

Has anyone looked into potentially profiting from the current spread between the bitcoin ETF (GBTC) and bitcoin? The ETF is trading at a 100% premium to NAV, seems to me like a no brainer trade to put on (long Bitcoin/Short ETF), but not sure which brokerages let you short the ETF since it's OTC. Looking at the historical spread it seems to get out of whack every now and then and then come back to earth.

 

Any thoughts appreciated.

 

Credits to Barron's article over the weekend which mentioned this.

 

http://www.barrons.com/articles/bitcoin-and-tech-stocks-a-21st-century-tulipmania-1495858829

 

lookup the ticker symbol on seeking alpha.  If I remember correctly, it has a few articles talking about the spread and how people think about it. 

[jb85]

Has anyone looked into potentially profiting from the current spread between the bitcoin ETF (GBTC) and bitcoin? The ETF is trading at a 100% premium to NAV, seems to me like a no brainer trade to put on (long Bitcoin/Short ETF), but not sure which brokerages let you short the ETF since it's OTC. Looking at the historical spread it seems to get out of whack every now and then and then come back to earth.

 

Any thoughts appreciated.

 

Credits to Barron's article over the weekend which mentioned this.

 

http://www.barrons.com/articles/bitcoin-and-tech-stocks-a-21st-century-tulipmania-1495858829

 

lookup the ticker symbol on seeking alpha.  If I remember correctly, it has a few articles talking about the spread and how people think about it.

 

its the only practical vehichle to buy BTC in your 401k or IRA.  In addition, the supply is limited. I forget the exact rule, but I think the original owners of GBTC can only sell their shares publically after having held GBTC to 2 years or something like that.  As i recall, that meant a large portion of the btc shares weren't even available for resale for a while.  In addition, i think its a closed end fund, so they aren't acquiring any new bitcoin.  Again, I could be wrong on any or all of the above, but that in general what i recall

[vox]

Another sign that bitcoin values are driven by speculation: https://www.reuters.com/article/us-bitcoin-asia-idUSKBN18T0K2