Help me get a basic education in cryptocurrency

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SlowMovingInvestor
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Re: Help me get a basic education in cryptocurrency

Post by SlowMovingInvestor »

Prahasaurus wrote: Mon Apr 19, 2021 2:29 pm
Uniswap is equivalent to Coinbase, you are arguing silly details
. It's like saying Coke is different from Pepsi because one is based in Atlanta while the other is not. I have no idea what you mean by Coinbase eating expenses....
It is not a silly detail, because Coinbase does a lot of stuff that Uniswap does not (i.e. Coinbase services go well beyond allowing exchanging of digital tokens). So they're not equivalent at all (*), and their 'market caps' are not comparable. Or their staff strengths.

Coinbase, Gemini and Celsius are likely eating the expense of converting $ into USDC or GUSD and carrying out KYC/AML when they do conversions or other expenses associated with maintaining reserves. Tether, well -- who knows what they do :happy ?

(*) ADDED: The appropriate comparison is not Pepsi/Coke, but maybe SoFi vs LendingClub
Last edited by SlowMovingInvestor on Mon Apr 19, 2021 2:57 pm, edited 2 times in total.
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arcticpineapplecorp.
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Re: Help me get a basic education in cryptocurrency

Post by arcticpineapplecorp. »

Read "The Delusions of Crowds: Why People Go Mad In Groups" By William Bernstein
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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novolog
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Re: Help me get a basic education in cryptocurrency

Post by novolog »

SlowMovingInvestor wrote: Mon Apr 19, 2021 2:27 pm
novolog wrote: Mon Apr 19, 2021 1:55 pm One of the mistakes many skeptics make is comparing Bitcoin to visa. Visa can support an enormous amount of transactions and is extremely centralized, but visa payments are not final settlement. There is a reason you can call them and have them cancel the transaction...

Bitcoin is optimizing for security rather than scalability. It should be compared to something like fedwire instead of visa.
Even wires can be reversed, if caught in time. Or there are legal processes to recover them, although the courts may rule against you (cf Citi's blooper wiring funds to Revlon creditors recently). And wires are subject to verification or other KYC/AML rules.

Personally, I think reversibility (especially for credit transactions) should be seen as a desirable feature since humans make mistakes and programs have bugs.
I agree that reversibility is desirable for high volume and small transactions like credit. In fact by nature they must be reversible, since they're all just recorded on a ledger and nothing has been settled until visa sends their wire.

wrt your thoughts on reversibility for final settlement - it's an interesting thought but I guess you have to draw the line somewhere? Why not just make final settlement final settlement?

The inability to alter a transaction after executing on a final settlement monetary layer seems to me to be an egalitarian trait if anything. For example - even if one can afford to throw all the legal money in the world at a transaction they would like to redact, they will be held to the same standards as everyone else: final settlement is final.

Just thinking out loud
Jeff Albertson
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Re: Help me get a basic education in cryptocurrency

Post by Jeff Albertson »

novolog wrote: Mon Apr 19, 2021 1:55 pm USD would be used to spend, Bitcoin would be used to save since it cannot be debased.
Well, I suppose Satoshi Nakamoto has never lied to you, or to anyone that we know of, correct?

What happens when a handful of bitcoin whales decide to cash out?
Using BitInfoChart’s latest calculations, 87 percent of all Bitcoins ever mined are owned by just half a percent of Bitcoin wallets. The figures only tighten from there. 61 percent of all Bitcoins are owned by just 0.07 percent of wallets. That’s an incredible amount of wealth in the hands of very, very few.
https://www.digitaltrends.com/computing ... e-bitcoin/
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HomerJ
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Re: Help me get a basic education in cryptocurrency

Post by HomerJ »

Prahasaurus wrote: Mon Apr 19, 2021 10:36 amDo you think earning low risk returns of 8-10% from dollar stablecoins is a legitimate use case for crypto?
It's not low-risk.
Alchemix, where you take out a loan in USD using crypto as collateral, and the loan is paid back by the protocol itself (generating yield on your collateral in the background), allowing Bitcoin or ETH holders to buy cars or homes with their crypto without ever spending anything from their collateral, just locking it into the Alchemix protocol until the collateral has earned enough to pay back the loan?
A giant house of cards that could tumble at any moment. I cannot believe you cannot see the risk here. It's margin investing. It's borrowing on your crypto-currency hoping it will continue to go up. There is no other way to win.

You have to put down MORE than the loan. No one is buying a car or a house with this. What's crazy is that people are taking that loan and buying MORE crypto-currency.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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HomerJ
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Re: Help me get a basic education in cryptocurrency

Post by HomerJ »

Jeff Albertson wrote: Mon Apr 19, 2021 3:19 pm
Using BitInfoChart’s latest calculations, 87 percent of all Bitcoins ever mined are owned by just half a percent of Bitcoin wallets. The figures only tighten from there. 61 percent of all Bitcoins are owned by just 0.07 percent of wallets. That’s an incredible amount of wealth in the hands of very, very few.
https://www.digitaltrends.com/computing ... e-bitcoin/
It's a giant scam, if the above is true. It certainly isn't some great equalizer for the masses like it's portrayed.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
SlowMovingInvestor
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Re: Help me get a basic education in cryptocurrency

Post by SlowMovingInvestor »

HomerJ wrote: Mon Apr 19, 2021 3:22 pm
Jeff Albertson wrote: Mon Apr 19, 2021 3:19 pm
Using BitInfoChart’s latest calculations, 87 percent of all Bitcoins ever mined are owned by just half a percent of Bitcoin wallets. The figures only tighten from there. 61 percent of all Bitcoins are owned by just 0.07 percent of wallets. That’s an incredible amount of wealth in the hands of very, very few.
https://www.digitaltrends.com/computing ... e-bitcoin/
It's a giant scam, if the above is true. It certainly isn't some great equalizer for the masses like it's portrayed.

Many of these are likely big wallets owned by exchanges like CoinBase and Gemini (*) or Lending orgs like BlockFi. It's similar to Fidelity holding stocks in street name for it's owners, and doesn't necessarily indicate concentration.

OTOH, it wouldn't surprise me in the least if some big whales -- 'Satoshi' or the Winklevoss twins, for instance, hold a significant chunk of bitcoins.

(*) I admit to being curious about how many wallets the big exchanges control and how they split up subsets of employees who know the key phrase for a wallet.
Last edited by SlowMovingInvestor on Mon Apr 19, 2021 3:34 pm, edited 1 time in total.
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HomerJ
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Re: Help me get a basic education in cryptocurrency

Post by HomerJ »

SlowMovingInvestor wrote: Mon Apr 19, 2021 3:29 pm
HomerJ wrote: Mon Apr 19, 2021 3:22 pm
Jeff Albertson wrote: Mon Apr 19, 2021 3:19 pm
Using BitInfoChart’s latest calculations, 87 percent of all Bitcoins ever mined are owned by just half a percent of Bitcoin wallets. The figures only tighten from there. 61 percent of all Bitcoins are owned by just 0.07 percent of wallets. That’s an incredible amount of wealth in the hands of very, very few.
https://www.digitaltrends.com/computing ... e-bitcoin/
It's a giant scam, if the above is true. It certainly isn't some great equalizer for the masses like it's portrayed.

Many of these are likely big wallets owned by exchanges like CoinBase and Gemini (*) or Lending orgs like BlockFi. It's similar to Fidelity holding stocks in street name for it's owners, and doesn't necessarily indicate concentration.

OTOH, it wouldn't surprise me in the least if some big whales -- 'Satoshi' or the Winklevoss twins, for instance, hold a significant chunk of bitcoins.
Too bad everything isn't transparent so we could know for sure then. Isn't bitcoin's claim to fame that it is so much more transparent than our current system?
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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novolog
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Re: Help me get a basic education in cryptocurrency

Post by novolog »

Jeff Albertson wrote: Mon Apr 19, 2021 3:19 pm
novolog wrote: Mon Apr 19, 2021 1:55 pm USD would be used to spend, Bitcoin would be used to save since it cannot be debased.
Well, I suppose Satoshi Nakamoto has never lied to you, or to anyone that we know of, correct?
I am not sure what you mean by this :confused - you can read the code if you want it's all publicly available online
Jeff Albertson wrote: Mon Apr 19, 2021 3:19 pm
What happens when a handful of bitcoin whales decide to cash out?
Using BitInfoChart’s latest calculations, 87 percent of all Bitcoins ever mined are owned by just half a percent of Bitcoin wallets. The figures only tighten from there. 61 percent of all Bitcoins are owned by just 0.07 percent of wallets. That’s an incredible amount of wealth in the hands of very, very few.
https://www.digitaltrends.com/computing ... e-bitcoin/
The largest wallets are exchanges. This is easy to confirm since the entire ledger is publicly available online.
Valuethinker
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Re: Help me get a basic education in cryptocurrency

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HomerJ wrote: Mon Apr 19, 2021 3:20 pm
Prahasaurus wrote: Mon Apr 19, 2021 10:36 amDo you think earning low risk returns of 8-10% from dollar stablecoins is a legitimate use case for crypto?
It's not low-risk.
Alchemix, where you take out a loan in USD using crypto as collateral, and the loan is paid back by the protocol itself (generating yield on your collateral in the background), allowing Bitcoin or ETH holders to buy cars or homes with their crypto without ever spending anything from their collateral, just locking it into the Alchemix protocol until the collateral has earned enough to pay back the loan?
A giant house of cards that could tumble at any moment. I cannot believe you cannot see the risk here. It's margin investing. It's borrowing on your crypto-currency hoping it will continue to go up. There is no other way to win.

You have to put down MORE than the loan. No one is buying a car or a house with this. What's crazy is that people are taking that loan and buying MORE crypto-currency.
At this point in something like this, people are too far down the tunnel to see the beginning or the end.

It wouldn't surprise me if this thing hits $100k or if it hits $100

It feels, as an outsider, like a classic pump and dump.
decapod10
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Re: Help me get a basic education in cryptocurrency

Post by decapod10 »

HomerJ wrote: Mon Apr 19, 2021 3:22 pm
Jeff Albertson wrote: Mon Apr 19, 2021 3:19 pm
Using BitInfoChart’s latest calculations, 87 percent of all Bitcoins ever mined are owned by just half a percent of Bitcoin wallets. The figures only tighten from there. 61 percent of all Bitcoins are owned by just 0.07 percent of wallets. That’s an incredible amount of wealth in the hands of very, very few.
https://www.digitaltrends.com/computing ... e-bitcoin/
It's a giant scam, if the above is true. It certainly isn't some great equalizer for the masses like it's portrayed.
I'm not an expert in Bitcoin, nor necessarily saying that concentration is not an issue, however this I think is very misleading. I don't even necessarily recommend people invest in crypto. But as mentioned, institutional investors and exchanges will have very high ownership. Also, % of wallets is very different than % of people or % of active wallets. I probably have 10 empty wallets, yet they would all count.

Otherwise, you could say TSLA is a scam because 20 entities own 34.5% of TSLA stock, which is probably even more concentrated than whatever Bitcoin metric they gave. So 20/300,000,000 people in the US = 0.000006% of the population owns 34.5% of TSLA stock. This is clearly a misleading and inaccurate statistic for a number of reasons.
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HomerJ
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Re: Help me get a basic education in cryptocurrency

Post by HomerJ »

novolog wrote: Mon Apr 19, 2021 3:38 pm The largest wallets are exchanges. This is easy to confirm since the entire ledger is publicly available online.
So if I place my wallet with an exchange, it no longer shows up as an individual wallet? All the wallets at Coinbase look like one large wallet?
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
txhill
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Re: Help me get a basic education in cryptocurrency

Post by txhill »

HomerJ wrote: Mon Apr 19, 2021 4:07 pm
novolog wrote: Mon Apr 19, 2021 3:38 pm The largest wallets are exchanges. This is easy to confirm since the entire ledger is publicly available online.
So if I place my wallet with an exchange, it no longer shows up as an individual wallet? All the wallets at Coinbase look like one large wallet?
They probably have a handful of wallets but for the most part, yes--and this will be true of any centralized exchange or platform. This makes it easy for them to aggregate thousands or even millions of transactions across their exchange into single transactions that need to be confirmed on-chain. I think the concentration data is somewhat misleading for this reason too.
decapod10
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Re: Help me get a basic education in cryptocurrency

Post by decapod10 »

HomerJ wrote: Mon Apr 19, 2021 4:07 pm
novolog wrote: Mon Apr 19, 2021 3:38 pm The largest wallets are exchanges. This is easy to confirm since the entire ledger is publicly available online.
So if I place my wallet with an exchange, it no longer shows up as an individual wallet? All the wallets at Coinbase look like one large wallet?
You don't place your wallet with an exchange, that's not something you can do really.

One important distinction is Coinbase Wallet vs Coinbase (the exchange) which are different. When you buy BTC on Coinbase, it goes into your exchange account. You access that BTC by logging into your Coinbase account. It is not a wallet (well, it is not YOUR wallet). Many people, especially those who really have no intention of using the crypto, will leave their crypto on their exchange account. All of that crypto is just stored by coinbase until you decide to transfer it to a wallet.

Coinbase Wallet is a proper wallet. I wouldn't think those would be aggregated, but I'm not 100% sure.
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novolog
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Re: Help me get a basic education in cryptocurrency

Post by novolog »

HomerJ wrote: Mon Apr 19, 2021 4:07 pm
novolog wrote: Mon Apr 19, 2021 3:38 pm The largest wallets are exchanges. This is easy to confirm since the entire ledger is publicly available online.
So if I place my wallet with an exchange, it no longer shows up as an individual wallet? All the wallets at Coinbase look like one large wallet?
Correct - you do not have your own wallet at an exchange, your bitcoins will be aggregated alongside other bitcoins from other accounts. You can check actually check this by searching for the address that your bitcoin comes from when you withdraw your bitcoin off of an exchange. Once you have the transaction ID and sending address, you can search the block ledger and find the the balance of the address. The address (which is owned by XYZ exchange) is likely to have a much larger number of bitcoins held on it than just your balance.

I am personally curious how different custodians hold their coins.

My understanding is that Fidelity has a dedicated mining department and has been mining since 2014/2015. I am curious how they store their coins for themselves as well as their clients (they offer cold storage for high net worth clients as well)
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Re: Help me get a basic education in cryptocurrency

Post by balofagus »

BeaglesRule wrote: Sat Apr 17, 2021 9:28 pm I’ve been reading about Bitcoin for a while now and am still clueless. I’ve read the Bogleheads forum comments on the current topic “For those adding crypto as an asset class to their AA” and checked out the links within and am still in the dark. To give you an idea on how lost I am - Coinbase was listed on Nasdaq this past week - is Coinbase cryptocurrency or a holding company/bank that holds the currency?
Can someone recommend articles, a blog, an author, or a website that will help me to understand what it’s all about, how it’s bought and sold, wallets, etc. I have no idea yet if I will eventually buy some but I’d like to at least understand enough to not embarrass myself when people are discussing the subject.
Gemini publishes a Cryptopedia <https://www.gemini.com/cryptopedia>
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HomerJ
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Re: Help me get a basic education in cryptocurrency

Post by HomerJ »

novolog wrote: Mon Apr 19, 2021 4:35 pm
HomerJ wrote: Mon Apr 19, 2021 4:07 pm
novolog wrote: Mon Apr 19, 2021 3:38 pm The largest wallets are exchanges. This is easy to confirm since the entire ledger is publicly available online.
So if I place my wallet with an exchange, it no longer shows up as an individual wallet? All the wallets at Coinbase look like one large wallet?
Correct - you do not have your own wallet at an exchange, your bitcoins will be aggregated alongside other bitcoins from other accounts. You can check actually check this by searching for the address that your bitcoin comes from when you withdraw your bitcoin off of an exchange. Once you have the transaction ID and sending address, you can search the block ledger and find the the balance of the address. The address (which is owned by XYZ exchange) is likely to have a much larger number of bitcoins held on it than just your balance.
Thanks for the response!

So, just curious... what keeps someone from Coinbase from stealing the $90 billion that is apparently in just one wallet?
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
decapod10
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Re: Help me get a basic education in cryptocurrency

Post by decapod10 »

HomerJ wrote: Mon Apr 19, 2021 4:55 pm
novolog wrote: Mon Apr 19, 2021 4:35 pm
HomerJ wrote: Mon Apr 19, 2021 4:07 pm
novolog wrote: Mon Apr 19, 2021 3:38 pm The largest wallets are exchanges. This is easy to confirm since the entire ledger is publicly available online.
So if I place my wallet with an exchange, it no longer shows up as an individual wallet? All the wallets at Coinbase look like one large wallet?
Correct - you do not have your own wallet at an exchange, your bitcoins will be aggregated alongside other bitcoins from other accounts. You can check actually check this by searching for the address that your bitcoin comes from when you withdraw your bitcoin off of an exchange. Once you have the transaction ID and sending address, you can search the block ledger and find the the balance of the address. The address (which is owned by XYZ exchange) is likely to have a much larger number of bitcoins held on it than just your balance.
Thanks for the response!

So, just curious... what keeps someone from Coinbase from stealing the $90 billion that is apparently in just one wallet?
Nothing really except the threat of law, same as most other companies, as well as whatever security features a company has in place. That's why many hardened crypto investors do not keep their crypto on an exchange. You may have heard the phrase "not your keys, not your crypto", it refers to holding crypto in your own wallet rather than trusting others to hold it.
SlowMovingInvestor
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Re: Help me get a basic education in cryptocurrency

Post by SlowMovingInvestor »

decapod10 wrote: Mon Apr 19, 2021 5:00 pm
Nothing really except the threat of law, same as most other companies, as well as whatever security features a company has in place. That's why many hardened crypto investors do not keep their crypto on an exchange. You may have heard the phrase "not your keys, not your crypto", it refers to holding crypto in your own wallet rather than trusting others to hold it.
I would hope it's not just one wallet. Multiple wallets, with max amt per wallet, with various groups of trusted employees required to open a wallet. And backups in geographically separated lockers, with multiple employees required to open a locker. This is definitely trickier than other assets, which can't be stolen or made inaccessible and ransomed so easily.

We could have a movie about a heist : Oceans 1011 :happy
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novolog
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Re: Help me get a basic education in cryptocurrency

Post by novolog »

HomerJ wrote: Mon Apr 19, 2021 4:55 pm
novolog wrote: Mon Apr 19, 2021 4:35 pm
HomerJ wrote: Mon Apr 19, 2021 4:07 pm
novolog wrote: Mon Apr 19, 2021 3:38 pm The largest wallets are exchanges. This is easy to confirm since the entire ledger is publicly available online.
So if I place my wallet with an exchange, it no longer shows up as an individual wallet? All the wallets at Coinbase look like one large wallet?
Correct - you do not have your own wallet at an exchange, your bitcoins will be aggregated alongside other bitcoins from other accounts. You can check actually check this by searching for the address that your bitcoin comes from when you withdraw your bitcoin off of an exchange. Once you have the transaction ID and sending address, you can search the block ledger and find the the balance of the address. The address (which is owned by XYZ exchange) is likely to have a much larger number of bitcoins held on it than just your balance.
Thanks for the response!

So, just curious... what keeps someone from Coinbase from stealing the $90 billion that is apparently in just one wallet?
That's honestly a great question - I am really curious about how these companies lock down access to the wallet(s) they hold their client's funds on.

To make your question even more poignant, they are obviously not covered by FDIC.

I personally self-custody my bitcoin so I don't have to worry about that issue. It comes with the risk that I forget both my pin number and lose my recovery phrase, but I have accepted that risk in exchange for full control over the asset.
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HomerJ
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Re: Help me get a basic education in cryptocurrency

Post by HomerJ »

SlowMovingInvestor wrote: Mon Apr 19, 2021 5:11 pm [We could have a movie about a heist : Oceans 1011 :happy
Heh, I see what you did there... :)
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Re: Help me get a basic education in cryptocurrency

Post by xraygoggles »

arcticpineapplecorp. wrote: Mon Apr 19, 2021 2:51 pm Read "The Delusions of Crowds: Why People Go Mad In Groups" By William Bernstein
Talk about perfect timing for a book!

SPACs, crypto, NFTs, EVs, cannabis, Tesla, and real estate - oh my!
txhill
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Re: Help me get a basic education in cryptocurrency

Post by txhill »

Yep. That's what happened with the Mt Gox exchange when crypto was even more like the wild west. Ever since that incident, advanced users will store most of their holdings in "cold" storage (meaning in a wallet that is not connected to the internet), or at least spread them around several exchanges / platforms, rather than keep everything on a single exchange.

This custodial issue is probably also one of the bigger barriers to getting an ETF approved--requires showing that the custodial solutions are sufficiently secure such that no single person can just abscond with everything. For example, I highly doubt that even Coinbase's CEO has complete access to the exchange wallet just on his own; it probably requires multiple signatures by multiple officers to get access. Something like that.
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Re: Help me get a basic education in cryptocurrency

Post by decapod10 »

SlowMovingInvestor wrote: Mon Apr 19, 2021 5:11 pm
decapod10 wrote: Mon Apr 19, 2021 5:00 pm
Nothing really except the threat of law, same as most other companies, as well as whatever security features a company has in place. That's why many hardened crypto investors do not keep their crypto on an exchange. You may have heard the phrase "not your keys, not your crypto", it refers to holding crypto in your own wallet rather than trusting others to hold it.
I would hope it's not just one wallet. Multiple wallets, with max amt per wallet, with various groups of trusted employees required to open a wallet. And backups in geographically separated lockers, with multiple employees required to open a locker. This is definitely trickier than other assets, which can't be stolen or made inaccessible and ransomed so easily.

We could have a movie about a heist : Oceans 1011 :happy
At least with Ethereum I don't see Coinbase on the first pages of Etherscan, so maybe they do break up their holdings, or maybe it's just not labelled. I see a lot of Binance, Kraken, and Gemini up there though on the first page.
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OohLaLa
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Re: Help me get a basic education in cryptocurrency

Post by OohLaLa »

balofagus wrote: Mon Apr 19, 2021 4:54 pm Gemini publishes a Cryptopedia <https://www.gemini.com/cryptopedia>
Thank you for keeping the spirit of this thread alive and thank you for the very nice resource! :sharebeer Added to my bookmarks!
SlowMovingInvestor
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Re: Help me get a basic education in cryptocurrency

Post by SlowMovingInvestor »

OohLaLa wrote: Mon Apr 19, 2021 6:07 pm
balofagus wrote: Mon Apr 19, 2021 4:54 pm Gemini publishes a Cryptopedia <https://www.gemini.com/cryptopedia>
Thank you for keeping the spirit of this thread alive and thank you for the very nice resource! :sharebeer Added to my bookmarks!
It is informative, but note that many of the articles (especially for other crypto tokens) are written by the originators/CEOs etc. of the tokens, so you have to discount some of their commentary.

The MIT OCW course posted earlier is very good (if slightly dated).
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investorpeter
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Re: Help me get a basic education in cryptocurrency

Post by investorpeter »

Gary Gensler (current chairman of SEC) taught a great course on cryptocurrency at MIT a couple of years ago. It’s available on YouTube, just search for it. It’s a great course for someone who knows nothing about crypto and a little about finance, which I imagine applies to most bogleheads. He has a more balanced middle of the road view of crypto somewhere between the hardcore “maximalist” type of views that are expressed by Cathie Wood, Michael Saylor, etc. and the “minimalist” views that are commonly expressed by more traditional investors and regulators like Buffett, Yellen, etc. Gensler’s comments on the regulatory aspects of crypto are of course excellent and highly relevant given his current position. It does go into the technical aspects of hash functions, public ledgers, mining, etc. but not too deeply that a novice couldn’t understand.
Enganerd
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Re: Help me get a basic education in cryptocurrency

Post by Enganerd »

hyperon wrote: Mon Apr 19, 2021 12:23 am OP,

It sounds like you're approaching Bitcoin and cryptocurrency with a very healthy dose of skepticism, and in my opinion that is the way to go. It is pretty hard to find relatively unbiased crypto content these days. I have done a fair amount of reading and listening to podcasts, and I honestly wouldn't "recommend" any of it. I am a fan of Lyn Alden (lynalden.com), and she has a few good free articles (Bitcoin, Ethereum) on her website. Though she's bullish on Bitcoin, she seems to maintain a decent amount of skepticism. This is a good place to start: https://www.lynalden.com/misconceptions-about-bitcoin/.

EDIT: I think Mike Green is a great Bitcoin skeptic to listen to (just Google him). He was recently on a Real Vision Network Podcast "battling" with Anthony (Pomp) Pompliano, one of the Bitcoin bulls that people listen to for reasons I really don't understand (https://www.realvision.com/shows/the-in ... on-bitcoin).

My advice: ignore anyone that says anything with certainty. There are, yet again, a number of posts already in this small thread from individuals that are certain of one thing or another, yet they make statements that are false and demonstrate that they have made little real effort to understand. On this site, nobody knows nothing, that is until you bring up crypto, and then everyone is an expert, and everyone "knows" it's a scam. They might be right, but they don't "know" they are.

I'd like to say that we'll see in 10 years or so, but maybe not, because maybe it'll just be a 20 trillion dollar market cap scam then.
Here is a podcast debate/conversation between Mike and Lyn.

https://iextrading.com/podcast/
Jeff Albertson
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Re: Help me get a basic education in cryptocurrency

Post by Jeff Albertson »

HomerJ wrote: Mon Apr 19, 2021 4:55 pm So, just curious... what keeps someone from Coinbase from stealing the $90 billion that is apparently in just one wallet?
See Mt. Gox
dt123
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Re: Help me get a basic education in cryptocurrency

Post by dt123 »

Don't even consider investing in crypto until you've thoroughly researched the clear manipulation of prices that have been revealed by those who have made the effort to look for it. The price can be driven up or down at will by one or more of the whales, working alone or in collusion, in ways that would be totally illegal in any other (regulated) market.

That reason alone is why I won't touch it again, and why, in my opinion, it should not even be legal in its present form.

Read about transaction spoofing, wash sales, etc.
Norsky19
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Re: Help me get a basic education in cryptocurrency

Post by Norsky19 »

JoMoney wrote: Sun Apr 18, 2021 9:42 am
BeaglesRule wrote: Sat Apr 17, 2021 9:28 pm... I’d like to at least understand enough to not embarrass myself when people are discussing the subject.
It's the crypto hucksters that should be embarrassed.
If you don't have any natural need or use of the product, and it's only "growth" in value is from convincing more people (and their money) into the pyramid scheme, it's not something you should feel compelled to get involved in. Would you be embarrassed for not selling some catalog product or diet bars/drinks that require you to enlist new sales people?
Crypto is the The Emperors New Clothes.
I liken it to a game of Musical Chairs...I don't want to get caught without a chair when the music stops.
GR8FUL-D
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Re: Help me get a basic education in cryptocurrency

Post by GR8FUL-D »

OohLaLa wrote: Mon Apr 19, 2021 11:34 am I'm surprised this thread is not being moderated...

1) BeaglesRule opened this thread to get resources for learning about cryptocurrency. Since then, this thread has devolved into a hodge-podge of crypto sub-topics. Very few people actually contributed to the original intent. There are plenty of other crypto threads on the forum.

2) Can people ease off with the smarta$$ one-liners adding zero to the discussion and basically shaming people willing to learn about a new subject? I completely understand the doubts about the investment quality of crypto, even as someone who just dove in recently, but we're veering into misdirected potshots here.
100% AGREE!!

Repeatedly forum members create posts like this one, and EVERY SINGLE TIME it gets derailed.
GregG3
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Re: Help me get a basic education in cryptocurrency

Post by GregG3 »

Prahasaurus wrote: Mon Apr 19, 2021 10:47 am
GregG3 wrote: Mon Apr 19, 2021 8:50 am Interesting fact about Bitcoin, not widely discussed, is the ultra-concentration of ownership. Around 95% of all minted Bitcoins are owned by 2% of Bitcoin holders!! Perhaps this alone explains the wild volatility on any given day.
This is a misrepresentation of the data.

Every major crypto exchange, company, mining operation, entity, and yes, every person, has bitcoin in an address (or multiple addresses) on the Bitcoin blockchain. How do you know if that address is for Joe Smith, Coinbase, Deutsche Bank, or Tesla Motors? You don't. It's like counting Bank of America as one US dollar holder, the same as Joe Smith. Then saying the US dollar is way over-concentrated in the hands of a few based on counting Bank of America and Wells Fargo and the European Central Bank as "people," similar to Joe Smith.
This is not my interpretation of data. It has been distributed in mid-Nov 2020 by Bloomberg based on a research done by Flipside Crypto who analysed the bitcoin blockchain.
Prahasaurus
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Re: Help me get a basic education in cryptocurrency

Post by Prahasaurus »

HomerJ wrote: Mon Apr 19, 2021 4:07 pm
novolog wrote: Mon Apr 19, 2021 3:38 pm The largest wallets are exchanges. This is easy to confirm since the entire ledger is publicly available online.
So if I place my wallet with an exchange, it no longer shows up as an individual wallet? All the wallets at Coinbase look like one large wallet?
??? You have been arguing with such confidence about crypto and associated risk for many months, but you don't understand how wallets work?

If this were a discussion on Belgium tax law, people probably wouldn't participate if they had no knowledge or experience with the subject. What is it about crypto that makes everyone an expert, arguing with such confidence and conviction? Truly fascinating!
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Prahasaurus
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Re: Help me get a basic education in cryptocurrency

Post by Prahasaurus »

GregG3 wrote: Tue Apr 20, 2021 3:18 am
Prahasaurus wrote: Mon Apr 19, 2021 10:47 am
GregG3 wrote: Mon Apr 19, 2021 8:50 am Interesting fact about Bitcoin, not widely discussed, is the ultra-concentration of ownership. Around 95% of all minted Bitcoins are owned by 2% of Bitcoin holders!! Perhaps this alone explains the wild volatility on any given day.
This is a misrepresentation of the data.

Every major crypto exchange, company, mining operation, entity, and yes, every person, has bitcoin in an address (or multiple addresses) on the Bitcoin blockchain. How do you know if that address is for Joe Smith, Coinbase, Deutsche Bank, or Tesla Motors? You don't. It's like counting Bank of America as one US dollar holder, the same as Joe Smith. Then saying the US dollar is way over-concentrated in the hands of a few based on counting Bank of America and Wells Fargo and the European Central Bank as "people," similar to Joe Smith.
This is not my interpretation of data. It has been distributed in mid-Nov 2020 by Bloomberg based on a research done by Flipside Crypto who analysed the bitcoin blockchain.
An argument from authority is a logical fallacy. Bloomberg is wrong if they imply every crypto address is owned by a person, and from that generalize on ownership concentration. As I said, it's like counting Mr. Wells Fargo or Mr Vanguard as an actual person and including "him" in your calculation of average American savings.
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JonnyDVM
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Re: Help me get a basic education in cryptocurrency

Post by JonnyDVM »

HomerJ wrote: Mon Apr 19, 2021 3:20 pm
Prahasaurus wrote: Mon Apr 19, 2021 10:36 amDo you think earning low risk returns of 8-10% from dollar stablecoins is a legitimate use case for crypto?
It's not low-risk.
Alchemix, where you take out a loan in USD using crypto as collateral, and the loan is paid back by the protocol itself (generating yield on your collateral in the background), allowing Bitcoin or ETH holders to buy cars or homes with their crypto without ever spending anything from their collateral, just locking it into the Alchemix protocol until the collateral has earned enough to pay back the loan?
A giant house of cards that could tumble at any moment. I cannot believe you cannot see the risk here. It's margin investing. It's borrowing on your crypto-currency hoping it will continue to go up. There is no other way to win.

You have to put down MORE than the loan. No one is buying a car or a house with this. What's crazy is that people are taking that loan and buying MORE crypto-currency.
Homer, for the last time. Cryptocurrency doesn’t follow any of the normal laws of economics, logic, and common sense. Once you accept that, it becomes a lot easier to buy it.
I’d trade it all for a little more | -C Montgomery Burns
Desx
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Re: Help me get a basic education in cryptocurrency

Post by Desx »

Bitcoin was created by an anonymous individual going by the fake name Satoshi Nakamoto. If you read Satoshi Nakamoto's white paper, link here, you can get a good understanding of bitcoin, the largest crypto by far:
https://bitcoin.org/bitcoin.pdf

One of the things Satoshi mentions, which currently and will forever hold true for BTC, is that an attacker with 51% of the hash rate (CPU power) of the network can control the network. Bitcoin, a "decentralized" currency, is not actually decentralized. The vast majority of the hash rate is in china.

https://cbeci.org/mining_map

As of last year at this time, the chinese controlled 65% of the CPU power vs just 7% for the united states. The reality? It is centralized in China since they have well over the amount of CPU needed to take control of the network and do they as they please with the blockchain. IMO Bogleheads interested in purchasing BTC need to understand that they are purchasing an asset under the control of the Chinese communist party, not a "decentralized" currency, and the risks that come along with holding an asset controlled by the second most controlling government on the planet. Jack Ma should be a good lesson to anyone interested in having their assets in China.

Any of the other "decentralized" currencies that use proof of work can also be controlled by a 51% attack. If you have the CPU power for 51% of the btc network, the largest network, you have the CPU power to control the other "decentralized" currencies. Their network is smaller, less hash rate, easier to have 51%. I think bogleheads can see what I'm getting at here.

Ethereum, about to transition to proof of stake, will be a good bit safer.
Last edited by Desx on Tue Apr 20, 2021 7:07 am, edited 3 times in total.
alluringreality
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Re: Help me get a basic education in cryptocurrency

Post by alluringreality »

GregG3 wrote: Tue Apr 20, 2021 3:18 am This is not my interpretation of data. It has been distributed in mid-Nov 2020 by Bloomberg based on a research done by Flipside Crypto who analysed the bitcoin blockchain.
Here is a source that was cited in response by cryptocurrency news sites.

We can derive that around 2% of network entities control 71.5% of all Bitcoin. Note that this figure is substantially different from the often propagated "2% control 95% of the supply".
https://insights.glassnode.com/bitcoin- ... tribution/
Targets: 15% I Bonds, 15% EE Bonds, 45% US Stock (Mid & Small Tilt), 25% Ex-US Stock (Small Tilt)
txhill
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Re: Help me get a basic education in cryptocurrency

Post by txhill »

Desx wrote: Tue Apr 20, 2021 7:02 am Bitcoin was created by an anonymous individual going by the fake name Satoshi Nakamoto. If you read Satoshi Nakamoto's white paper, link here, you can get a good understanding of bitcoin, the largest crypto by far:
https://bitcoin.org/bitcoin.pdf

One of the things Satoshi mentions, which currently and will forever hold true for BTC, is that an attacker with 51% of the hash rate (CPU power) of the network can control the network. Bitcoin, a "decentralized" currency, is not actually decentralized. The vast majority of the hash rate is in china.

https://cbeci.org/mining_map

As of last year at this time, the chinese controlled 65% of the CPU power vs just 7% for the united states. The reality? It is centralized in China since they have well over the amount of CPU needed to take control of the network and do they as they please with the blockchain. IMO Bogleheads interested in purchasing BTC need to understand that they are purchasing an asset under the control of the Chinese communist party, not a "decentralized" currency, and the risks that come along with holding an asset controlled by the second most controlling government on the planet. Jack Ma should be a good lesson to anyone interested in having their assets in China.

Any of the other "decentralized" currencies that use proof of work can also be controlled by a 51% attack. If you have the CPU power for 51% of the btc network, the largest network, you have the CPU power to control the other "decentralized" currencies. Their network is smaller, less hash rate, easier to have 51%. I think bogleheads can see what I'm getting at here.

Ethereum, about to transition to proof of stake, will be a good bit safer.
The China point is often bandied about. I think it is a reasonable thing to be concerned about, but the risk is overblown. First, the Chinese central bank went on record yesterday calling bitcoin an "investment alternative." They're realizing, like everyone else, that bitcoin doesn't directly threaten money and won't threaten the Chinese digital yuan; it's just an investment. Second, plenty of folks invest in Chinese companies that are just as vulnerable as mining operations (actually more so, because mining operations are highly mobile and can pack up and move at the first whiff of trouble). Third, other countries are improving their mining infrastructure, so the 51% attack risk from China is decreasing constantly.
Desx
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Re: Help me get a basic education in cryptocurrency

Post by Desx »

txhill wrote: Tue Apr 20, 2021 8:32 am
Desx wrote: Tue Apr 20, 2021 7:02 am Bitcoin was created by an anonymous individual going by the fake name Satoshi Nakamoto. If you read Satoshi Nakamoto's white paper, link here, you can get a good understanding of bitcoin, the largest crypto by far:
https://bitcoin.org/bitcoin.pdf

One of the things Satoshi mentions, which currently and will forever hold true for BTC, is that an attacker with 51% of the hash rate (CPU power) of the network can control the network. Bitcoin, a "decentralized" currency, is not actually decentralized. The vast majority of the hash rate is in china.

https://cbeci.org/mining_map

As of last year at this time, the chinese controlled 65% of the CPU power vs just 7% for the united states. The reality? It is centralized in China since they have well over the amount of CPU needed to take control of the network and do they as they please with the blockchain. IMO Bogleheads interested in purchasing BTC need to understand that they are purchasing an asset under the control of the Chinese communist party, not a "decentralized" currency, and the risks that come along with holding an asset controlled by the second most controlling government on the planet. Jack Ma should be a good lesson to anyone interested in having their assets in China.

Any of the other "decentralized" currencies that use proof of work can also be controlled by a 51% attack. If you have the CPU power for 51% of the btc network, the largest network, you have the CPU power to control the other "decentralized" currencies. Their network is smaller, less hash rate, easier to have 51%. I think bogleheads can see what I'm getting at here.

Ethereum, about to transition to proof of stake, will be a good bit safer.
The China point is often bandied about. I think it is a reasonable thing to be concerned about, but the risk is overblown. First, the Chinese central bank went on record yesterday calling bitcoin an "investment alternative." They're realizing, like everyone else, that bitcoin doesn't directly threaten money and won't threaten the Chinese digital yuan; it's just an investment. Second, plenty of folks invest in Chinese companies that are just as vulnerable as mining operations (actually more so, because mining operations are highly mobile and can pack up and move at the first whiff of trouble). Third, other countries are improving their mining infrastructure, so the 51% attack risk from China is decreasing constantly.
First, would an authoritarian government willingly approve a "censorship resistant, decentralized" asset? would they approve assets that cannot be controlled/confiscated? Of course not, the chinese central bank said bitcoin is ok because the CCP is aware that china's hash rate controls the block chain. Full stop. They have 65% when you only need 51%. They are in control at this moment.

Second: I do NOT invest any chinese companies. "Plenty of people" is vague statement ignoring the fact that there is drastic risk in a country where one of the richest men was silenced and forced to divest of his control of his own created companies solely because he said the banking system is outdated there. "Plenty of people" bought doge, are you going to do it? Does that vague statement mean there is no risk? They won't pack up and move, when a government wants something its security forces show up at your door when guns. They don't just let you go

Third, this is just not true. The US is in second place at 7% vs china's 65%. They are significantly above the 51% attack point and any thought they will drop below it is speculation. So long as they are in control of the block chain, in my opinion, this is a huge risk. I dont give a flying **** what anyone speculates will happen in the future, at this moment the Chinese government can do whatever they want to btc or any other Proof of work crypto. MAYBE somehow the US will overtake them. But then again, MAYBE things will stay as they are.
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Re: Help me get a basic education in cryptocurrency

Post by txhill »

Desx wrote: Tue Apr 20, 2021 10:55 am
txhill wrote: Tue Apr 20, 2021 8:32 am
Desx wrote: Tue Apr 20, 2021 7:02 am Bitcoin was created by an anonymous individual going by the fake name Satoshi Nakamoto. If you read Satoshi Nakamoto's white paper, link here, you can get a good understanding of bitcoin, the largest crypto by far:
https://bitcoin.org/bitcoin.pdf

One of the things Satoshi mentions, which currently and will forever hold true for BTC, is that an attacker with 51% of the hash rate (CPU power) of the network can control the network. Bitcoin, a "decentralized" currency, is not actually decentralized. The vast majority of the hash rate is in china.

https://cbeci.org/mining_map

As of last year at this time, the chinese controlled 65% of the CPU power vs just 7% for the united states. The reality? It is centralized in China since they have well over the amount of CPU needed to take control of the network and do they as they please with the blockchain. IMO Bogleheads interested in purchasing BTC need to understand that they are purchasing an asset under the control of the Chinese communist party, not a "decentralized" currency, and the risks that come along with holding an asset controlled by the second most controlling government on the planet. Jack Ma should be a good lesson to anyone interested in having their assets in China.

Any of the other "decentralized" currencies that use proof of work can also be controlled by a 51% attack. If you have the CPU power for 51% of the btc network, the largest network, you have the CPU power to control the other "decentralized" currencies. Their network is smaller, less hash rate, easier to have 51%. I think bogleheads can see what I'm getting at here.

Ethereum, about to transition to proof of stake, will be a good bit safer.
The China point is often bandied about. I think it is a reasonable thing to be concerned about, but the risk is overblown. First, the Chinese central bank went on record yesterday calling bitcoin an "investment alternative." They're realizing, like everyone else, that bitcoin doesn't directly threaten money and won't threaten the Chinese digital yuan; it's just an investment. Second, plenty of folks invest in Chinese companies that are just as vulnerable as mining operations (actually more so, because mining operations are highly mobile and can pack up and move at the first whiff of trouble). Third, other countries are improving their mining infrastructure, so the 51% attack risk from China is decreasing constantly.
First, would an authoritarian government willingly approve a "censorship resistant, decentralized" asset? would they approve assets that cannot be controlled/confiscated? Of course not, the chinese central bank said bitcoin is ok because the CCP is aware that china's hash rate controls the block chain. Full stop. They have 65% when you only need 51%. They are in control at this moment.

Second: I do NOT invest any chinese companies. "Plenty of people" is vague statement ignoring the fact that there is drastic risk in a country where one of the richest men was silenced and forced to divest of his control of his own created companies solely because he said the banking system is outdated there. "Plenty of people" bought doge, are you going to do it? Does that vague statement mean there is no risk? They won't pack up and move, when a government wants something its security forces show up at your door when guns. They don't just let you go

Third, this is just not true. The US is in second place at 7% vs china's 65%. They are significantly above the 51% attack point and any thought they will drop below it is speculation. So long as they are in control of the block chain, in my opinion, this is a huge risk. I dont give a flying **** what anyone speculates will happen in the future, at this moment the Chinese government can do whatever they want to btc or any other Proof of work crypto. MAYBE somehow the US will overtake them. But then again, MAYBE things will stay as they are.
Ok, maybe we can continue this conversation after you've calmed down a bit. You seem to be quite emotional about this issue.
flyfishers83
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Re: Help me get a basic education in cryptocurrency

Post by flyfishers83 »

My problem with the China issue, is that I don’t know how to evaluate the risk. What are the positive or negative outcomes presented by the risk and what are the associated probabilities? I don’t even think I could enumerate all of the risks.
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Re: Help me get a basic education in cryptocurrency

Post by HomerJ »

flyfishers83 wrote: Tue Apr 20, 2021 11:08 am My problem with the China issue, is that I don’t know how to evaluate the risk. What are the positive or negative outcomes presented by the risk and what are the associated probabilities? I don’t even think I could enumerate all of the risks.
It is indeed hard to quantify the risk. But the risk does exist.

So when someone tells you confidently it's a low-risk investment, you know they are lying or haven't thought it all the way through.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Re: Help me get a basic education in cryptocurrency

Post by txhill »

HomerJ wrote: Tue Apr 20, 2021 11:12 am
flyfishers83 wrote: Tue Apr 20, 2021 11:08 am My problem with the China issue, is that I don’t know how to evaluate the risk. What are the positive or negative outcomes presented by the risk and what are the associated probabilities? I don’t even think I could enumerate all of the risks.
It is indeed hard to quantify the risk. But the risk does exist.

So when someone tells you confidently it's a low-risk investment, you know they are lying or haven't thought it all the way through.
I agree there is risk. It's impossible to precisely quantify. I just happen to think this particular risk is overstated because it fits the popular "China bad" fearmongering in certain parts of the media. There are plenty of risks with bitcoin, but it's just whether you see the risks outweighed by the potential upsides (which I've repeated enough on the forum).
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Re: Help me get a basic education in cryptocurrency

Post by tradri »

txhill wrote: Tue Apr 20, 2021 11:24 am
I agree there is risk. It's impossible to precisely quantify. I just happen to think this particular risk is overstated because it fits the popular "China bad" fearmongering in certain parts of the media. There are plenty of risks with bitcoin, but it's just whether you see the risks outweighed by the potential upsides (which I've repeated enough on the forum).
What are those massive upsides? 2x your investment, 3x?

Do you actually see Bitcoin's market cap going above $5 trillion?
Desx
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Re: Help me get a basic education in cryptocurrency

Post by Desx »

txhill wrote: Tue Apr 20, 2021 11:24 am
HomerJ wrote: Tue Apr 20, 2021 11:12 am
flyfishers83 wrote: Tue Apr 20, 2021 11:08 am My problem with the China issue, is that I don’t know how to evaluate the risk. What are the positive or negative outcomes presented by the risk and what are the associated probabilities? I don’t even think I could enumerate all of the risks.
It is indeed hard to quantify the risk. But the risk does exist.

So when someone tells you confidently it's a low-risk investment, you know they are lying or haven't thought it all the way through.
I agree there is risk. It's impossible to precisely quantify. I just happen to think this particular risk is overstated because it fits the popular "China bad" fearmongering in certain parts of the media. There are plenty of risks with bitcoin, but it's just whether you see the risks outweighed by the potential upsides (which I've repeated enough on the forum).
I think there a lot of Muslim people who might tell you that china bad is not fearmongering and that their government controlling your assets is actually bad.
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Re: Help me get a basic education in cryptocurrency

Post by txhill »

tradri wrote: Tue Apr 20, 2021 11:28 am
txhill wrote: Tue Apr 20, 2021 11:24 am
I agree there is risk. It's impossible to precisely quantify. I just happen to think this particular risk is overstated because it fits the popular "China bad" fearmongering in certain parts of the media. There are plenty of risks with bitcoin, but it's just whether you see the risks outweighed by the potential upsides (which I've repeated enough on the forum).
What are those massive upsides? 2x your investment, 3x?

Do you actually see Bitcoin's market cap going above $5 trillion?
I expect it to take a larger share of the market cap for stores of value, especially as Web 3.0 takes off and people increasingly rely on bitcoin (the asset) as collateral and bitcoin's network (i.e., the hashing power in the network) for Web 3.0 applications. I assume this adoption and innovation process will take a long time though, so I'm eyeing a 10 year time horizon right now. I would not be surprised to see it 3x over 10 years but I can't quantify exactly what my price target is. If the valuation explodes in the short term without the # of users and applications also growing to keep pace, I'll assume we're in bubble territory and may back off my investment a little bit then.
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Re: Help me get a basic education in cryptocurrency

Post by tradri »

txhill wrote: Tue Apr 20, 2021 12:35 pm
I expect it to take a larger share of the market cap for stores of value, especially as Web 3.0 takes off and people increasingly rely on bitcoin (the asset) as collateral and bitcoin's network (i.e., the hashing power in the network) for Web 3.0 applications. I assume this adoption and innovation process will take a long time though, so I'm eyeing a 10 year time horizon right now. I would not be surprised to see it 3x over 10 years but I can't quantify exactly what my price target is. If the valuation explodes in the short term without the # of users and applications also growing to keep pace, I'll assume we're in bubble territory and may back off my investment a little bit then.
What are some practical use cases of Web 3.0?
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Re: Help me get a basic education in cryptocurrency

Post by txhill »

tradri wrote: Tue Apr 20, 2021 12:46 pm
txhill wrote: Tue Apr 20, 2021 12:35 pm
I expect it to take a larger share of the market cap for stores of value, especially as Web 3.0 takes off and people increasingly rely on bitcoin (the asset) as collateral and bitcoin's network (i.e., the hashing power in the network) for Web 3.0 applications. I assume this adoption and innovation process will take a long time though, so I'm eyeing a 10 year time horizon right now. I would not be surprised to see it 3x over 10 years but I can't quantify exactly what my price target is. If the valuation explodes in the short term without the # of users and applications also growing to keep pace, I'll assume we're in bubble territory and may back off my investment a little bit then.
What are some practical use cases of Web 3.0?
The way the space seems to be developing is like this, although a lot of this is guesswork (like guessing exactly what the web in the 2000s would look like back in the 1990s). I'm sure this post will look incredibly stupid 50 years from now. But here goes:

1. Decentralized finance: this is the obvious one. If it takes off, it opens up access to finance to the unbanked, eliminates middlemen and minimizes fees, reduces some risks associated with trusting 3rd parties through traditional finance (although introduces other risks like programming errors). It won't completely destroy traditional banks, but it will force them to innovate. BlockFi is centralized and I think it has a very bright future.

2. Gaming / virtual worlds / "metaverse". I think we'll only see this space grow; kids these days would rather meet with friends on Fortnite than toss a baseball around. It's now possible to build stable economies and confer actual ownership over digital properties. Think "Ready Player One." This is a good read: https://metaversed.net/Into-The-Void-Wh ... 689e01acaa And you just know that once we have tech good enough to build the Matrix, people will choose to live in it permanently and whole economies will be built in those virtual worlds. I imagine 100 years from now this will be simply massive.

3. Digital ownership generally. It's really hard to know what this will look like. NFTs are all over the news, and I imagine most things currently being sold as NFTs really are worthless. But the technology has huge implications. This ties a bit into #2 above but is an even broader idea that will apply to basically anything that is scarce, or that people want to be scarce, which really is mostly anything. Art, event tickets, etc.
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tradri
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Re: Help me get a basic education in cryptocurrency

Post by tradri »

txhill wrote: Tue Apr 20, 2021 12:58 pm
The way the space seems to be developing is like this, although a lot of this is guesswork (like guessing exactly what the web in the 2000s would look like back in the 1990s). I'm sure this post will look incredibly stupid 50 years from now. But here goes:

1. Decentralized finance: this is the obvious one. If it takes off, it opens up access to finance to the unbanked, eliminates middlemen and minimizes fees, reduces some risks associated with trusting 3rd parties through traditional finance (although introduces other risks like programming errors). It won't completely destroy traditional banks, but it will force them to innovate. BlockFi is centralized and I think it has a very bright future.

2. Gaming / virtual worlds / "metaverse". I think we'll only see this space grow; kids these days would rather meet with friends on Fortnite than toss a baseball around. It's now possible to build stable economies and confer actual ownership over digital properties. Think "Ready Player One." This is a good read: https://metaversed.net/Into-The-Void-Wh ... 689e01acaa And you just know that once we have tech good enough to build the Matrix, people will choose to live in it permanently and whole economies will be built in those virtual worlds. I imagine 100 years from now this will be simply massive.

3. Digital ownership generally. It's really hard to know what this will look like. NFTs are all over the news, and I imagine most things currently being sold as NFTs really are worthless. But the technology has huge implications. This ties a bit into #2 above but is an even broader idea that will apply to basically anything that is scarce, or that people want to be scarce, which really is mostly anything. Art, event tickets, etc.
1. Decentralized systems are always more inefficient than centralized systems. There is no way a decentralized system can compete in terms of speed & fees with a centralized system. Maybe this will evolve to a usable state in the future, but so far no decentralized system has been built that can approach the efficiency of the centralized systems we have today.

2. 3. I've never been into collecting things like Pokémon cards either, but collecting a "proof of ownership" of a .jpeg seems even more useless.
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