Crypto mania !

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Astones
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Re: Crypto mania !

Post by Astones »

Green Street wrote: Sat May 08, 2021 9:39 pm and I still firmly believe in the technology.
I am fascinated by the technology as well, yet I don't consider crypto a wise investment. The relevance of the technology behind crypto does not imply that crypto itself is a good investment. In fact, the two things are completely uncorrelated.
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JoMoney
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Re: Crypto mania !

Post by JoMoney »

Astones wrote: Sun May 09, 2021 10:45 am
Green Street wrote: Sat May 08, 2021 9:39 pm and I still firmly believe in the technology.
I am fascinated by the technology as well, yet I don't consider crypto a wise investment. The relevance of the technology behind crypto does not imply that crypto itself is a good investment. In fact, the two things are completely uncorrelated.
Some people don't seem to grasp that a distributed ledger/blockchain could be very useful technology, and still not something you can monetize on its own ... ironically, I say this while I've seen no wide spread practical use of the technology and lots of people making money off trading it :annoyed :mrgreen:
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

JoMoney wrote: Sun May 09, 2021 10:54 am
Some people don't seem to grasp that a distributed ledger/blockchain could be very useful technology, and still not something you can monetize on its own ... ironically, I say this while I've seen no wide spread practical use of the technology and lots of people making money off trading it :annoyed :mrgreen:
While this is true, there are also projects that are earning fees:

https://cryptofees.info/

My little hobbyist DIY index has a criteria of making >$100K 7 day average fees to be included.
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

vwgrrc wrote: Sat May 08, 2021 11:43 pm

4. Index > Active
Yes, that's a lovely recurring topic, too.
Last edited by watchnerd on Sun May 09, 2021 11:03 am, edited 1 time in total.
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Top99%
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Re: Crypto mania !

Post by Top99% »

Astones wrote: Sun May 09, 2021 10:45 am
Green Street wrote: Sat May 08, 2021 9:39 pm and I still firmly believe in the technology.
I am fascinated by the technology as well, yet I don't consider crypto a wise investment. The relevance of the technology behind crypto does not imply that crypto itself is a good investment. In fact, the two things are completely uncorrelated.
I am in exactly the same camp. I can see Blockchain being used for a lot of very useful things but don't have the interest or need in trying to pick winners and losers. I will let the market sort that out along with what Tesla is eventually worth.
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

Top99% wrote: Sun May 09, 2021 11:03 am
I am in exactly the same camp. I can see Blockchain being used for a lot of very useful things but don't have the interest or need in trying to pick winners and losers. I will let the market sort that out along with what Tesla is eventually worth.
You don't have to pick winners and losers.

You can just buy the various crypto projects by cap weight.

Which is what I'm doing, with some criteria to limit how small down the long tail I want to bother with.
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Astones
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Re: Crypto mania !

Post by Astones »

watchnerd wrote: Sun May 09, 2021 11:05 am
Top99% wrote: Sun May 09, 2021 11:03 am
I am in exactly the same camp. I can see Blockchain being used for a lot of very useful things but don't have the interest or need in trying to pick winners and losers. I will let the market sort that out along with what Tesla is eventually worth.
You don't have to pick winners and losers.

You can just buy the various crypto projects by cap weight.

Which is what I'm doing, with some criteria to limit how small down the long tail I want to bother with.
While much better than just buying bitcoins, I'm not a fan of that approach either.
I personally prefer to only invest in assets that create added value, therefore no gold, no silver, no currencies.
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

Astones wrote: Sun May 09, 2021 11:37 am
While much better than just buying bitcoins, I'm not a fan of that approach either.
I personally prefer to only invest in assets that create added value, therefore no gold, no silver, no currencies.
That is 98% of my portfolio at present market weights.

But, philosophically, I'm trying to hold the global liquid market portfolio, which includes small slices of things like crypto (~2% of at current $2.4T market cap) and ETF-traded gold (0.17% at $200B market cap).

If I truly believe the wisdom of markets is wise enough to follow for stocks and bonds, it's philosophically hard for me to categorically discount the part of the tradeable market that consists of other assets that money flows into for specialized reasons (hedging, speculation, etc).

Efficient Frontier theory maps to this, I think, and I find it consistent with Sharpe's writings on the global market portfolio.
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dt123
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Re: Crypto mania !

Post by dt123 »

Amazing that some posters are still using use their (reported) windfall from crypto as some sort of proof that crypto is/was a wise investment. It's the same as saying: "I guessed the lotto numbers yesterday and made a lot of money. Now if only you were as smart as me."

Because that's all it is. You gambled on crypto speculation and it paid off for you (or so you say). Don't fault other people for being more judicious with their money.

The pump continues.
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Blueskies123
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Re: Crypto mania !

Post by Blueskies123 »

watchnerd wrote: Sun May 09, 2021 11:49 am
Astones wrote: Sun May 09, 2021 11:37 am
While much better than just buying bitcoins, I'm not a fan of that approach either.
I personally prefer to only invest in assets that create added value, therefore no gold, no silver, no currencies.
That is 98% of my portfolio at present market weights.

But, philosophically, I'm trying to hold the global liquid market portfolio, which includes small slices of things like crypto (~2% of at current $2.4T market cap) and ETF-traded gold (0.17% at $200B market cap).

If I truly believe the wisdom of markets is wise enough to follow for stocks and bonds, it's philosophically hard for me to categorically discount the part of the tradeable market that consists of other assets that money flows into for specialized reasons (hedging, speculation, etc).

Efficient Frontier theory maps to this, I think, and I find it consistent with Sharpe's writings on the global market portfolio.
I agree with you. When we talk about Crypto people think we are talking about throwing 100 percent of our portfolio into Crypto. I have had 5% of my stock portfolio in gold for a long time. I took 1% of that 5% and put it into Crypto. If it goes to zero I am not losing any sleep. I have studied long enough to see that there is something there. Is it overvalued, yes?
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

Blueskies123 wrote: Sun May 09, 2021 1:13 pm If it goes to zero I am not losing any sleep.
Ditto.

Crypto is 2% of my Risk Portfolio, not my total portfolio.

(see signature)

In parallel, I have already an LMP ladder of TIPS and STRIPS that covers the next 16 years of living expenses, all the way until I'm old enough to collect full Social Security.

And no debt, and no mortgage.

I'm not exactly betting the farm here.
Last edited by watchnerd on Sun May 09, 2021 1:21 pm, edited 1 time in total.
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txhill
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Re: Crypto mania !

Post by txhill »

dt123 wrote: Sun May 09, 2021 1:07 pm Amazing that some posters are still using use their (reported) windfall from crypto as some sort of proof that crypto is/was a wise investment. It's the same as saying: "I guessed the lotto numbers yesterday and made a lot of money. Now if only you were as smart as me."

Because that's all it is. You gambled on crypto speculation and it paid off for you (or so you say). Don't fault other people for being more judicious with their money.

The pump continues.
I think plenty of gamblers have done well in crypto, but the majority of people who made life-changing money were those who recognized early on that (1) money really is nothing more than a social network and (2) the next big social network will be decentralized, and put those two components together. It's no accident that the Winklevoss twins saw bitcoin and went headfirst into it early on; they also were early to recognize the potential of a facebook social network. Those are people who made a wise investment, even if gamblers tagged along too (although I'd bet that most gamblers cashed out after getting a good return but didn't stick it out for a decade like the biggest winners in the space).

Perfectly fine to be restrained in your investment strategy, but I think it's unfair to be so condescending to people who identified important trends early on, even if the execution risk was quite high at the time.
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Re: Crypto mania !

Post by Prahasaurus »

JoMoney wrote: Sun May 09, 2021 10:54 am
Astones wrote: Sun May 09, 2021 10:45 am
Green Street wrote: Sat May 08, 2021 9:39 pm and I still firmly believe in the technology.
I am fascinated by the technology as well, yet I don't consider crypto a wise investment. The relevance of the technology behind crypto does not imply that crypto itself is a good investment. In fact, the two things are completely uncorrelated.
Some people don't seem to grasp that a distributed ledger/blockchain could be very useful technology, and still not something you can monetize on its own ... ironically, I say this while I've seen no wide spread practical use of the technology and lots of people making money off trading it :annoyed :mrgreen:
Some people don't seem to grasp that blockchain applications are being monetized right now, even though we've given multiple examples. Uniswap booked over 7 million USD in revenue over the past 24 hours: https://cryptofees.info. Aave did almost 2 million over the past 24 hours. Both of those entities have been in production for just over 1 year. To put that in perspective, Uniswap generates more revenue in three days than Amazon.com did in its entire first year of operation.

But he's personally seen "no widespread use of the technology." OK, then!
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

Prahasaurus wrote: Sun May 09, 2021 1:24 pm

Some people don't seem to grasp that blockchain applications are being monetized right now, even though we've given multiple examples. Uniswap booked over 7 million USD in revenue over the past 24 hours: https://cryptofees.info. Aave did almost 2 million over the past 24 hours. Both of those entities have been in production for just over 1 year. To put that in perspective, Uniswap generates more revenue in three days than Amazon.com did in its entire first year of operation.

But he's personally seen "no widespread use of the technology." OK, then!
To be fair, I think part of the problem is the name "crypto currency".

Which is mostly Bitcoin's fault in terms of messaging and positioning, throwing a big shadow over the whole crypto space.
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txhill
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Re: Crypto mania !

Post by txhill »

Prahasaurus wrote: Sun May 09, 2021 1:24 pm
JoMoney wrote: Sun May 09, 2021 10:54 am
Astones wrote: Sun May 09, 2021 10:45 am
Green Street wrote: Sat May 08, 2021 9:39 pm and I still firmly believe in the technology.
I am fascinated by the technology as well, yet I don't consider crypto a wise investment. The relevance of the technology behind crypto does not imply that crypto itself is a good investment. In fact, the two things are completely uncorrelated.
Some people don't seem to grasp that a distributed ledger/blockchain could be very useful technology, and still not something you can monetize on its own ... ironically, I say this while I've seen no wide spread practical use of the technology and lots of people making money off trading it :annoyed :mrgreen:
Some people don't seem to grasp that blockchain applications are being monetized right now, even though we've given multiple examples. Uniswap booked over 7 million USD in revenue over the past 24 hours: https://cryptofees.info. Aave did almost 2 million over the past 24 hours. Both of those entities have been in production for just over 1 year. To put that in perspective, Uniswap generates more revenue in three days than Amazon.com did in its entire first year of operation.

But he's personally seen "no widespread use of the technology." OK, then!
Prahasaurus, do you know of a good resource that explains how value accrues to the AAVE and UNI tokens? I've basically just focused on ETH and feel like I understand it well, and have been using it as a good enough proxy for the space (since everything operates on the Ethereum blockchain) but maybe it's time I educate myself more...
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watchnerd
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Re: Crypto mania !

Post by watchnerd »

txhill wrote: Sun May 09, 2021 1:30 pm

Prahasaurus, do you know of a good resource that explains how value accrues to the AAVE and UNI tokens? I've basically just focused on ETH and feel like I understand it well, and have been using it as a good enough proxy for the space (since everything operates on the Ethereum blockchain) but maybe it's time I educate myself more...
If you watch the developer tutorials, it explains it.

Same for MKR, COMP, SUSHI.
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txhill
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Re: Crypto mania !

Post by txhill »

watchnerd wrote: Sun May 09, 2021 1:34 pm
txhill wrote: Sun May 09, 2021 1:30 pm

Prahasaurus, do you know of a good resource that explains how value accrues to the AAVE and UNI tokens? I've basically just focused on ETH and feel like I understand it well, and have been using it as a good enough proxy for the space (since everything operates on the Ethereum blockchain) but maybe it's time I educate myself more...
If you watch the developer tutorials, it explains it.

Same for MKR, COMP, SUSHI.
Ah ok it's a staking / validating mechanism too, I guess.
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Re: Crypto mania !

Post by Prahasaurus »

watchnerd wrote: Sun May 09, 2021 1:28 pm
Prahasaurus wrote: Sun May 09, 2021 1:24 pm

Some people don't seem to grasp that blockchain applications are being monetized right now, even though we've given multiple examples. Uniswap booked over 7 million USD in revenue over the past 24 hours: https://cryptofees.info. Aave did almost 2 million over the past 24 hours. Both of those entities have been in production for just over 1 year. To put that in perspective, Uniswap generates more revenue in three days than Amazon.com did in its entire first year of operation.

But he's personally seen "no widespread use of the technology." OK, then!
To be fair, I think part of the problem is the name "crypto currency".

Which is mostly Bitcoin's fault in terms of messaging and positioning, throwing a big shadow over the whole crypto space.
Sorry, that is not the problem. We have given multiple examples. That could have been the problem 6 months ago, but he's posted in enough threads to know very well the difference between Uniswap, Aave, and Bitcoin. I know I've explained it about 20 times. At some point we have to acknowledge it's just a refusal to go past the most superficial takes on crypto, to ignore facts, to speak in generalities.

So for the 21st time, here are fees generated by crypto protocols over the past 24 hours: https://cryptofees.info Some are from mining, e.g. Bitcoin. Yes, that is more "commodity like" and I accept it's highly speculative, similar to gold (the "fees" for Bitcoin are paid to miners). But many of those protocols generate fees (the equivalent of revenue) by providing services that thousands of people are paying for right now. Most are related to finance, as decentralized finance (DeFi) is the first major use case to gain traction on Ethereum. Nobody mines Uniswap or Aave, it's a completely different animal, more equivalent to companies (even though they are not companies, but protocols).

Go back and look at the revenue Amazon.com did in its first year, then compare to any protocol on this list. It's actually amazing what is happening. If you don't understand it, if you've never logged on to any of these applications, if you couldn't use MetaMask if your life depended on it, no worries. Most people haven't (yet). But then don't post here that there is no widespread use of the technology. Because the amount of traction is unbelievable for protocols that are live on Ethereum for just over one year! I repeat, these protocols are just over 1 year old and they are generating millions of dollars a day from users (not miners, but users).

That's what gets me the most. The biggest detractors have never used DeFi, never bought gas (ETH) for transactions, never actually connected their MetaMask wallet to Aave or Synthetix, staked, borrowed, provided liquidity, etc., in any protocol .. And yet they are experts on what is happening in crypto, experts on who is using what (or not using what). If I had never studied finance or filed a tax return in my life, I certainly wouldn't be posting in threads at Bogleheads on tax policy. I would admit I have no idea what I'm talking about. But with crypto, everyone is an expert. Just truly amazing.
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txhill
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Re: Crypto mania !

Post by txhill »

Prahasaurus wrote: Sun May 09, 2021 1:52 pm
watchnerd wrote: Sun May 09, 2021 1:28 pm
Prahasaurus wrote: Sun May 09, 2021 1:24 pm

Some people don't seem to grasp that blockchain applications are being monetized right now, even though we've given multiple examples. Uniswap booked over 7 million USD in revenue over the past 24 hours: https://cryptofees.info. Aave did almost 2 million over the past 24 hours. Both of those entities have been in production for just over 1 year. To put that in perspective, Uniswap generates more revenue in three days than Amazon.com did in its entire first year of operation.

But he's personally seen "no widespread use of the technology." OK, then!
To be fair, I think part of the problem is the name "crypto currency".

Which is mostly Bitcoin's fault in terms of messaging and positioning, throwing a big shadow over the whole crypto space.
Sorry, that is not the problem. We have given multiple examples. That could have been the problem 6 months ago, but he's posted in enough threads to know very well the difference between Uniswap, Aave, and Bitcoin. I know I've explained it about 20 times. At some point we have to acknowledge it's just a refusal to go past the most superficial takes on crypto, to ignore facts, to speak in generalities.

So for the 21st time, here are fees generated by crypto protocols over the past 24 hours: https://cryptofees.info Some are from mining, e.g. Bitcoin. Yes, that is more "commodity like" and I accept it's highly speculative, similar to gold (the "fees" for Bitcoin are paid to miners). But many of those protocols generate fees (the equivalent of revenue) by providing services that thousands of people are paying for right now. Most are related to finance, as decentralized finance (DeFi) is the first major use case to gain traction on Ethereum. Nobody mines Uniswap or Aave, it's a completely different animal, more equivalent to companies (even though they are not companies, but protocols).

Go back and look at the revenue Amazon.com did in its first year, then compare to any protocol on this list. It's actually amazing what is happening. If you don't understand it, if you've never logged on to any of these applications, if you couldn't use MetaMask if your life depended on it, no worries. Most people haven't (yet). But then don't post here that there is no widespread use of the technology. Because the amount of traction is unbelievable for protocols that are live on Ethereum for just over one year! I repeat, these protocols are just over 1 year old and they are generating millions of dollars a day from users (not miners, but users).

That's what gets me the most. The biggest detractors have never used DeFi, never bought gas (ETH) for transactions, never actually connected their MetaMask wallet to Aave or Synthetix, staked, borrowed, provided liquidity, etc., in any protocol .. And yet they are experts on what is happening in crypto, experts on who is using what (or not using what). If I had never studied finance or filed a tax return in my life, I certainly wouldn't be posting in threads at Bogleheads on tax policy. I would admit I have no idea what I'm talking about. But with crypto, everyone is an expert. Just truly amazing.
The price to revenue ratios between UNI, AAVE, etc are quite different and all much lower than for ETH, which I think is still deeply undervalued. They might all be pretty undervalued although I'd be curious to see some analysis modeling the different protocols.
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Re: Crypto mania !

Post by Prahasaurus »

txhill wrote: Sun May 09, 2021 1:30 pm
Prahasaurus wrote: Sun May 09, 2021 1:24 pm
JoMoney wrote: Sun May 09, 2021 10:54 am
Astones wrote: Sun May 09, 2021 10:45 am
Green Street wrote: Sat May 08, 2021 9:39 pm and I still firmly believe in the technology.
I am fascinated by the technology as well, yet I don't consider crypto a wise investment. The relevance of the technology behind crypto does not imply that crypto itself is a good investment. In fact, the two things are completely uncorrelated.
Some people don't seem to grasp that a distributed ledger/blockchain could be very useful technology, and still not something you can monetize on its own ... ironically, I say this while I've seen no wide spread practical use of the technology and lots of people making money off trading it :annoyed :mrgreen:
Some people don't seem to grasp that blockchain applications are being monetized right now, even though we've given multiple examples. Uniswap booked over 7 million USD in revenue over the past 24 hours: https://cryptofees.info. Aave did almost 2 million over the past 24 hours. Both of those entities have been in production for just over 1 year. To put that in perspective, Uniswap generates more revenue in three days than Amazon.com did in its entire first year of operation.

But he's personally seen "no widespread use of the technology." OK, then!
Prahasaurus, do you know of a good resource that explains how value accrues to the AAVE and UNI tokens? I've basically just focused on ETH and feel like I understand it well, and have been using it as a good enough proxy for the space (since everything operates on the Ethereum blockchain) but maybe it's time I educate myself more...
There is an excellent podcast called Bankless. Please look it up on your application of choice for podcasts. I can't recommend it highly enough. Please listen to episode 62 from April 26th. It's with Joel Monegro of Placeholder Venture Capital, and he discusses governance tokens and how value accrues to token holders. They talk about Uniswap in particular.

Warning: it's a long (90 minute?) podcast, touching on many subjects around governance. They get into DAO's and how they could transform governance structure well beyond traditional crypto projects. Super interesting.
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txhill
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Re: Crypto mania !

Post by txhill »

Prahasaurus wrote: Sun May 09, 2021 1:58 pm There is an excellent podcast called Bankless. Please look it up on your application of choice for podcasts. I can't recommend it highly enough. Please listen to episode 62 from April 26th. It's with Joel Monegro of Placeholder Venture Capital, and he discusses governance tokens and how value accrues to token holders. They talk about Uniswap in particular.

Warning: it's a long (90 minute?) podcast, touching on many subjects around governance. They get into DAO's and how they could transform governance structure well beyond traditional crypto projects. Super interesting.
Thanks, will check it out. As an aside, I love that some of the most detailed and productive discussion on crypto are on anti-crypto threads like "Crypto Mania" and "Cryptocurrencies are NOT good investments" :)
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Re: Crypto mania !

Post by Prahasaurus »

txhill wrote: Sun May 09, 2021 1:57 pm
Prahasaurus wrote: Sun May 09, 2021 1:52 pm
watchnerd wrote: Sun May 09, 2021 1:28 pm
Prahasaurus wrote: Sun May 09, 2021 1:24 pm

Some people don't seem to grasp that blockchain applications are being monetized right now, even though we've given multiple examples. Uniswap booked over 7 million USD in revenue over the past 24 hours: https://cryptofees.info. Aave did almost 2 million over the past 24 hours. Both of those entities have been in production for just over 1 year. To put that in perspective, Uniswap generates more revenue in three days than Amazon.com did in its entire first year of operation.

But he's personally seen "no widespread use of the technology." OK, then!
To be fair, I think part of the problem is the name "crypto currency".

Which is mostly Bitcoin's fault in terms of messaging and positioning, throwing a big shadow over the whole crypto space.
Sorry, that is not the problem. We have given multiple examples. That could have been the problem 6 months ago, but he's posted in enough threads to know very well the difference between Uniswap, Aave, and Bitcoin. I know I've explained it about 20 times. At some point we have to acknowledge it's just a refusal to go past the most superficial takes on crypto, to ignore facts, to speak in generalities.

So for the 21st time, here are fees generated by crypto protocols over the past 24 hours: https://cryptofees.info Some are from mining, e.g. Bitcoin. Yes, that is more "commodity like" and I accept it's highly speculative, similar to gold (the "fees" for Bitcoin are paid to miners). But many of those protocols generate fees (the equivalent of revenue) by providing services that thousands of people are paying for right now. Most are related to finance, as decentralized finance (DeFi) is the first major use case to gain traction on Ethereum. Nobody mines Uniswap or Aave, it's a completely different animal, more equivalent to companies (even though they are not companies, but protocols).

Go back and look at the revenue Amazon.com did in its first year, then compare to any protocol on this list. It's actually amazing what is happening. If you don't understand it, if you've never logged on to any of these applications, if you couldn't use MetaMask if your life depended on it, no worries. Most people haven't (yet). But then don't post here that there is no widespread use of the technology. Because the amount of traction is unbelievable for protocols that are live on Ethereum for just over one year! I repeat, these protocols are just over 1 year old and they are generating millions of dollars a day from users (not miners, but users).

That's what gets me the most. The biggest detractors have never used DeFi, never bought gas (ETH) for transactions, never actually connected their MetaMask wallet to Aave or Synthetix, staked, borrowed, provided liquidity, etc., in any protocol .. And yet they are experts on what is happening in crypto, experts on who is using what (or not using what). If I had never studied finance or filed a tax return in my life, I certainly wouldn't be posting in threads at Bogleheads on tax policy. I would admit I have no idea what I'm talking about. But with crypto, everyone is an expert. Just truly amazing.
The price to revenue ratios between UNI, AAVE, etc are quite different and all much lower than for ETH, which I think is still deeply undervalued. They might all be pretty undervalued although I'd be curious to see some analysis modeling the different protocols.
It's a complex issue. And ETH is special. I'm not sure we can compare ETH to AAVE. AAVE to UNI, ok. Different use cases, but we can compare. But ETH? That is such a unique asset, I'm really stumped on how to value ETH. I suppose once we move to PoS we can look at returns on invested capital, as ETH should start to function as a high yield bond? Certainly one of the things I'm most excited about is being able to lock my ETH into validators and generate daily yield paid in a hard asset (ETH), thanks to its amazing utility (powering the Ethereum virtual computer). I think that is going to really be revolutionary if they pull it all off.
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Janus887
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Re: Crypto mania !

Post by Janus887 »

One of the dumbest people I know (not trying to be cruel with that assessment, just think of the type of person who consistently makes poor decisions and is generally their own worst enemy in every aspect of life) recently told me that she is now "investing" in crypto. This woman could not explain to you the difference between a stock and a bond with a gun to her head. Yet we must now count her among those of us who are savvy and sophisticated enough to recognize the value and future potential of crypto.

What is going on here, exactly? Has the investment world been turned on its head? Do the old rules no longer apply? Is crypto a once-in-a-lifetime financial revolution that will topple the financial oligarchs and make the common man rich?

No, no and no. We have been down this road before. The details change but the game remains the same. We are simply experiencing the late stages of a bubble. This bubble has been amplified by the fact that it is also inherently a pyramid scheme, in which earlier participants are themselves directly enriched by recruiting others to join them in the scheme (by bidding up the price of the crypto they are currently holding/mining). Because it is entirely devoid of practical value, crypto depends on proselytizing new converts to join the fold in order to continue appreciating. Early on, the only people interested in joining the crypto cult were those enamored with the underlying blockchain technology itself. These were joined shortly thereafter by hardcore libertarian/anarchist types who were convinced that digital money would free them from living under the oppressive thumb of governments and central banks. Over the following years a small contingent of forward-thinking speculators acquired crypto positions, and until the 2017 run-up began this was core constituency of crypto "hodlers".

In contrast, the average post-2017 crypto buyer (and especially 2021 buyers) have one reason and one reason alone for joining the crypto cult: because crypto only goes up. Since we all know this is a fact, why wouldn't we buy as much crypto as we can afford, right? We will get rich! Everyone is getting rich off crypto! It's great. You may consider yourself a sophisticated buyer who is carefully examining long term financial and technological trends. But you're riding in the same train car as the guy who YOLOed his stimmy check on dogecoin for "teh lulz".

So what does this mean, from a practical perspective? It means that when this crypto bubble pops the unwinding will be reminiscent of Hobbes' life of man: nasty, brutish and short. The vast majority of people holing crypto have no faith in it as anything except a token which they can exchange in the future for a higher amount of fiat than which they originally paid for it. Once that illusion is shattered the stampede for the exits will be one for the history books, as the dawning realization spreads that everyone exchanged their dollars for bits on a computer screen, solely for the purpose of selling those bits to some other foolish bagholder for more dollars at some point in the future. There will be much wailing and gnashing of teeth when most crypto cultists realize they ended up as the foolish bagholders themselves.

Perhaps the popping of the current crypto bubble will actually serve as the regulatory impetus for governments to move in and take over the crypto market with their own digital currencies. Much easier to ban cryptocurrencies in the wake of a >90% crash that at this point would doubtless send shockwaves through the entire financial system. Bye bye, Bitcoin and Ethereum. Hello digi-yuan and fedcoin. For all we know this was always the plan. Who is Satoshi Nakamoto, anyway?

I don't know when this epic crypto crash will happen, but it will, as surely as Spring follows Winter. Technologies and economies change, but men don't. A combination of greed and laziness has always driven us to seek out ways to get rich with the least amount of effort possible. Crypto speculation is merely the latest manifestation of this age-old vice. And vices are always punished sooner or later.
txhill
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Re: Crypto mania !

Post by txhill »

Janus887 wrote: Sun May 09, 2021 2:14 pm One of the dumbest people I know (not trying to be cruel with that assessment, just think of the type of person who consistently makes poor decisions and is generally their own worst enemy in every aspect of life) recently told me that she is now "investing" in crypto. This woman could not explain to you the difference between a stock and a bond with a gun to her head. Yet we must now count her among those of us who are savvy and sophisticated enough to recognize the value and future potential of crypto.

What is going on here, exactly? Has the investment world been turned on its head? Do the old rules no longer apply? Is crypto a once-in-a-lifetime financial revolution that will topple the financial oligarchs and make the common man rich?

No, no and no. We have been down this road before. The details change but the game remains the same. We are simply experiencing the late stages of a bubble. This bubble has been amplified by the fact that it is also inherently a pyramid scheme, in which earlier participants are themselves directly enriched by recruiting others to join them in the scheme (by bidding up the price of the crypto they are currently holding/mining). Because it is entirely devoid of practical value, crypto depends on proselytizing new converts to join the fold in order to continue appreciating. Early on, the only people interested in joining the crypto cult were those enamored with the underlying blockchain technology itself. These were joined shortly thereafter by hardcore libertarian/anarchist types who were convinced that digital money would free them from living under the oppressive thumb of governments and central banks. Over the following years a small contingent of forward-thinking speculators acquired crypto positions, and until the 2017 run-up began this was core constituency of crypto "hodlers".

In contrast, the average post-2017 crypto buyer (and especially 2021 buyers) have one reason and one reason alone for joining the crypto cult: because crypto only goes up. Since we all know this is a fact, why wouldn't we buy as much crypto as we can afford, right? We will get rich! Everyone is getting rich off crypto! It's great. You may consider yourself a sophisticated buyer who is carefully examining long term financial and technological trends. But you're riding in the same train car as the guy who YOLOed his stimmy check on dogecoin for "teh lulz".

So what does this mean, from a practical perspective? It means that when this crypto bubble pops the unwinding will be reminiscent of Hobbes' life of man: nasty, brutish and short. The vast majority of people holing crypto have no faith in it as anything except a token which they can exchange in the future for a higher amount of fiat than which they originally paid for it. Once that illusion is shattered the stampede for the exits will be one for the history books, as the dawning realization spreads that everyone exchanged their dollars for bits on a computer screen, solely for the purpose of selling those bits to some other foolish bagholder for more dollars at some point in the future. There will be much wailing and gnashing of teeth when most crypto cultists realize they ended up as the foolish bagholders themselves.

Perhaps the popping of the current crypto bubble will actually serve as the regulatory impetus for governments to move in and take over the crypto market with their own digital currencies. Much easier to ban cryptocurrencies in the wake of a >90% crash that at this point would doubtless send shockwaves through the entire financial system. Bye bye, Bitcoin and Ethereum. Hello digi-yuan and fedcoin. For all we know this was always the plan. Who is Satoshi Nakamoto, anyway?

I don't know when this epic crypto crash will happen, but it will, as surely as Spring follows Winter. Technologies and economies change, but men don't. A combination of greed and laziness has always driven us to seek out ways to get rich with the least amount of effort possible. Crypto speculation is merely the latest manifestation of this age-old vice. And vices are always punished sooner or later.
Some of the dumbest people I know happen to own land that has oil under it. They're not geniuses but they sure are rich. Sometimes being lucky is more valuable than being smart.

I think the real question is whether the mania around crypto assets is leading to useful innovation (like the internet, which went through plenty of mania but still ended up dominating the economy) or whether it is pure speculative nonsense (like tulips). That's where I think it is worth digging a bit further. You will find that there is a lot of actual use cases already at work in decentralized finance and NFTs, and there is a tremendous amount of intellectual capital directed at the space--an indicator of innovation to come.

You might be right that an epic crash is on its way, but I think you are making a VERY bold statement if you are saying that there are literally no use cases for crypto. Because that's already not true. Whether the size of that market can grow, we'll just have to see.
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Re: Crypto mania !

Post by Green Street »

Janus887 wrote: Sun May 09, 2021 2:14 pm One of the dumbest people I know (not trying to be cruel with that assessment, just think of the type of person who consistently makes poor decisions and is generally their own worst enemy in every aspect of life) recently told me that she is now "investing" in crypto. This woman could not explain to you the difference between a stock and a bond with a gun to her head. Yet we must now count her among those of us who are savvy and sophisticated enough to recognize the value and future potential of crypto.

What is going on here, exactly? Has the investment world been turned on its head? Do the old rules no longer apply? Is crypto a once-in-a-lifetime financial revolution that will topple the financial oligarchs and make the common man rich?

No, no and no. We have been down this road before. The details change but the game remains the same. We are simply experiencing the late stages of a bubble. This bubble has been amplified by the fact that it is also inherently a pyramid scheme, in which earlier participants are themselves directly enriched by recruiting others to join them in the scheme (by bidding up the price of the crypto they are currently holding/mining). Because it is entirely devoid of practical value, crypto depends on proselytizing new converts to join the fold in order to continue appreciating. Early on, the only people interested in joining the crypto cult were those enamored with the underlying blockchain technology itself. These were joined shortly thereafter by hardcore libertarian/anarchist types who were convinced that digital money would free them from living under the oppressive thumb of governments and central banks. Over the following years a small contingent of forward-thinking speculators acquired crypto positions, and until the 2017 run-up began this was core constituency of crypto "hodlers".

In contrast, the average post-2017 crypto buyer (and especially 2021 buyers) have one reason and one reason alone for joining the crypto cult: because crypto only goes up. Since we all know this is a fact, why wouldn't we buy as much crypto as we can afford, right? We will get rich! Everyone is getting rich off crypto! It's great. You may consider yourself a sophisticated buyer who is carefully examining long term financial and technological trends. But you're riding in the same train car as the guy who YOLOed his stimmy check on dogecoin for "teh lulz".

So what does this mean, from a practical perspective? It means that when this crypto bubble pops the unwinding will be reminiscent of Hobbes' life of man: nasty, brutish and short. The vast majority of people holing crypto have no faith in it as anything except a token which they can exchange in the future for a higher amount of fiat than which they originally paid for it. Once that illusion is shattered the stampede for the exits will be one for the history books, as the dawning realization spreads that everyone exchanged their dollars for bits on a computer screen, solely for the purpose of selling those bits to some other foolish bagholder for more dollars at some point in the future. There will be much wailing and gnashing of teeth when most crypto cultists realize they ended up as the foolish bagholders themselves.

Perhaps the popping of the current crypto bubble will actually serve as the regulatory impetus for governments to move in and take over the crypto market with their own digital currencies. Much easier to ban cryptocurrencies in the wake of a >90% crash that at this point would doubtless send shockwaves through the entire financial system. Bye bye, Bitcoin and Ethereum. Hello digi-yuan and fedcoin. For all we know this was always the plan. Who is Satoshi Nakamoto, anyway?

I don't know when this epic crypto crash will happen, but it will, as surely as Spring follows Winter. Technologies and economies change, but men don't. A combination of greed and laziness has always driven us to seek out ways to get rich with the least amount of effort possible. Crypto speculation is merely the latest manifestation of this age-old vice. And vices are always punished sooner or later.
OMG not another bubble! Oh the horror! Bogleheads are really obsessed with bubbles.
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HomerJ
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Re: Crypto mania !

Post by HomerJ »

Janus887 wrote: Sun May 09, 2021 2:14 pmIn contrast, the average post-2017 crypto buyer (and especially 2021 buyers) have one reason and one reason alone for joining the crypto cult: because crypto only goes up. Since we all know this is a fact, why wouldn't we buy as much crypto as we can afford, right? We will get rich! Everyone is getting rich off crypto! It's great. You may consider yourself a sophisticated buyer who is carefully examining long term financial and technological trends. But you're riding in the same train car as the guy who YOLOed his stimmy check on dogecoin for "teh lulz".

So what does this mean, from a practical perspective? It means that when this crypto bubble pops the unwinding will be reminiscent of Hobbes' life of man: nasty, brutish and short. The vast majority of people holing crypto have no faith in it as anything except a token which they can exchange in the future for a higher amount of fiat than which they originally paid for it. Once that illusion is shattered the stampede for the exits will be one for the history books, as the dawning realization spreads that everyone exchanged their dollars for bits on a computer screen, solely for the purpose of selling those bits to some other foolish bagholder for more dollars at some point in the future. There will be much wailing and gnashing of teeth when most crypto cultists realize they ended up as the foolish bagholders themselves.
This is an extremely important point.

Even if crypto-currency does have a legitimate use, even if the enthusiasts on this board are RIGHT, it's still all likely to crash hard because there is too much leverage and too many people investing today who have no idea what they are investing in.

Bubbles and crashes are feedback loops. Once a bunch of people panic and sell, that drives that price lower, which causes another group to panic and sell, and so on. Anything that has a rapid bubble rise from a positive feedback loop bringing in unsophisticated investors, by definition, already has the necessary conditions and type of people involved for a rapid crash to happen as well.
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: Crypto mania !

Post by Green Street »

HomerJ wrote: Sun May 09, 2021 2:44 pm
Janus887 wrote: Sun May 09, 2021 2:14 pmIn contrast, the average post-2017 crypto buyer (and especially 2021 buyers) have one reason and one reason alone for joining the crypto cult: because crypto only goes up. Since we all know this is a fact, why wouldn't we buy as much crypto as we can afford, right? We will get rich! Everyone is getting rich off crypto! It's great. You may consider yourself a sophisticated buyer who is carefully examining long term financial and technological trends. But you're riding in the same train car as the guy who YOLOed his stimmy check on dogecoin for "teh lulz".

So what does this mean, from a practical perspective? It means that when this crypto bubble pops the unwinding will be reminiscent of Hobbes' life of man: nasty, brutish and short. The vast majority of people holing crypto have no faith in it as anything except a token which they can exchange in the future for a higher amount of fiat than which they originally paid for it. Once that illusion is shattered the stampede for the exits will be one for the history books, as the dawning realization spreads that everyone exchanged their dollars for bits on a computer screen, solely for the purpose of selling those bits to some other foolish bagholder for more dollars at some point in the future. There will be much wailing and gnashing of teeth when most crypto cultists realize they ended up as the foolish bagholders themselves.
This is an extremely important point.

Even if crypto-currency does have a legitimate use, even if the enthusiasts on this board are RIGHT, it's still all likely to crash hard because there is too much leverage and too many people investing today who have no idea what they are investing in.

Bubbles and crashes are feedback loops. Once a bunch of people panic and sell, that drives that price lower, which causes another group to panic and sell, and so on. Anything that has a rapid bubble rise from a positive feedback loop bringing in unsophisticated investors, by definition, already has the necessary conditions and type of people involved for a rapid crash to happen as well.
Just like the equities market is bound to crash right, oh no more bubbles!
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HomerJ
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Re: Crypto mania !

Post by HomerJ »

txhill wrote: Sun May 09, 2021 2:29 pm
Janus887 wrote: Sun May 09, 2021 2:14 pm One of the dumbest people I know (not trying to be cruel with that assessment, just think of the type of person who consistently makes poor decisions and is generally their own worst enemy in every aspect of life) recently told me that she is now "investing" in crypto. This woman could not explain to you the difference between a stock and a bond with a gun to her head. Yet we must now count her among those of us who are savvy and sophisticated enough to recognize the value and future potential of crypto.

What is going on here, exactly? Has the investment world been turned on its head? Do the old rules no longer apply? Is crypto a once-in-a-lifetime financial revolution that will topple the financial oligarchs and make the common man rich?

No, no and no. We have been down this road before. The details change but the game remains the same. We are simply experiencing the late stages of a bubble. This bubble has been amplified by the fact that it is also inherently a pyramid scheme, in which earlier participants are themselves directly enriched by recruiting others to join them in the scheme (by bidding up the price of the crypto they are currently holding/mining). Because it is entirely devoid of practical value, crypto depends on proselytizing new converts to join the fold in order to continue appreciating. Early on, the only people interested in joining the crypto cult were those enamored with the underlying blockchain technology itself. These were joined shortly thereafter by hardcore libertarian/anarchist types who were convinced that digital money would free them from living under the oppressive thumb of governments and central banks. Over the following years a small contingent of forward-thinking speculators acquired crypto positions, and until the 2017 run-up began this was core constituency of crypto "hodlers".

In contrast, the average post-2017 crypto buyer (and especially 2021 buyers) have one reason and one reason alone for joining the crypto cult: because crypto only goes up. Since we all know this is a fact, why wouldn't we buy as much crypto as we can afford, right? We will get rich! Everyone is getting rich off crypto! It's great. You may consider yourself a sophisticated buyer who is carefully examining long term financial and technological trends. But you're riding in the same train car as the guy who YOLOed his stimmy check on dogecoin for "teh lulz".

So what does this mean, from a practical perspective? It means that when this crypto bubble pops the unwinding will be reminiscent of Hobbes' life of man: nasty, brutish and short. The vast majority of people holing crypto have no faith in it as anything except a token which they can exchange in the future for a higher amount of fiat than which they originally paid for it. Once that illusion is shattered the stampede for the exits will be one for the history books, as the dawning realization spreads that everyone exchanged their dollars for bits on a computer screen, solely for the purpose of selling those bits to some other foolish bagholder for more dollars at some point in the future. There will be much wailing and gnashing of teeth when most crypto cultists realize they ended up as the foolish bagholders themselves.

Perhaps the popping of the current crypto bubble will actually serve as the regulatory impetus for governments to move in and take over the crypto market with their own digital currencies. Much easier to ban cryptocurrencies in the wake of a >90% crash that at this point would doubtless send shockwaves through the entire financial system. Bye bye, Bitcoin and Ethereum. Hello digi-yuan and fedcoin. For all we know this was always the plan. Who is Satoshi Nakamoto, anyway?

I don't know when this epic crypto crash will happen, but it will, as surely as Spring follows Winter. Technologies and economies change, but men don't. A combination of greed and laziness has always driven us to seek out ways to get rich with the least amount of effort possible. Crypto speculation is merely the latest manifestation of this age-old vice. And vices are always punished sooner or later.
Some of the dumbest people I know happen to own land that has oil under it. They're not geniuses but they sure are rich. Sometimes being lucky is more valuable than being smart.
That's not the same thing at all.
I think the real question is whether the mania around crypto assets is leading to useful innovation (like the internet, which went through plenty of mania but still ended up dominating the economy) or whether it is pure speculative nonsense (like tulips).
That's a much better question.
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: Crypto mania !

Post by HomerJ »

Green Street wrote: Sun May 09, 2021 2:46 pm
HomerJ wrote: Sun May 09, 2021 2:44 pm
Janus887 wrote: Sun May 09, 2021 2:14 pmIn contrast, the average post-2017 crypto buyer (and especially 2021 buyers) have one reason and one reason alone for joining the crypto cult: because crypto only goes up. Since we all know this is a fact, why wouldn't we buy as much crypto as we can afford, right? We will get rich! Everyone is getting rich off crypto! It's great. You may consider yourself a sophisticated buyer who is carefully examining long term financial and technological trends. But you're riding in the same train car as the guy who YOLOed his stimmy check on dogecoin for "teh lulz".

So what does this mean, from a practical perspective? It means that when this crypto bubble pops the unwinding will be reminiscent of Hobbes' life of man: nasty, brutish and short. The vast majority of people holing crypto have no faith in it as anything except a token which they can exchange in the future for a higher amount of fiat than which they originally paid for it. Once that illusion is shattered the stampede for the exits will be one for the history books, as the dawning realization spreads that everyone exchanged their dollars for bits on a computer screen, solely for the purpose of selling those bits to some other foolish bagholder for more dollars at some point in the future. There will be much wailing and gnashing of teeth when most crypto cultists realize they ended up as the foolish bagholders themselves.
This is an extremely important point.

Even if crypto-currency does have a legitimate use, even if the enthusiasts on this board are RIGHT, it's still all likely to crash hard because there is too much leverage and too many people investing today who have no idea what they are investing in.

Bubbles and crashes are feedback loops. Once a bunch of people panic and sell, that drives that price lower, which causes another group to panic and sell, and so on. Anything that has a rapid bubble rise from a positive feedback loop bringing in unsophisticated investors, by definition, already has the necessary conditions and type of people involved for a rapid crash to happen as well.
Just like the equities market is bound to crash right, oh no more bubbles!
How old are you?
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: Crypto mania !

Post by ballons »

HomerJ wrote: Sun May 09, 2021 2:44 pm
Janus887 wrote: Sun May 09, 2021 2:14 pmIn contrast, the average post-2017 crypto buyer (and especially 2021 buyers) have one reason and one reason alone for joining the crypto cult: because crypto only goes up. Since we all know this is a fact, why wouldn't we buy as much crypto as we can afford, right? We will get rich! Everyone is getting rich off crypto! It's great. You may consider yourself a sophisticated buyer who is carefully examining long term financial and technological trends. But you're riding in the same train car as the guy who YOLOed his stimmy check on dogecoin for "teh lulz".

So what does this mean, from a practical perspective? It means that when this crypto bubble pops the unwinding will be reminiscent of Hobbes' life of man: nasty, brutish and short. The vast majority of people holing crypto have no faith in it as anything except a token which they can exchange in the future for a higher amount of fiat than which they originally paid for it. Once that illusion is shattered the stampede for the exits will be one for the history books, as the dawning realization spreads that everyone exchanged their dollars for bits on a computer screen, solely for the purpose of selling those bits to some other foolish bagholder for more dollars at some point in the future. There will be much wailing and gnashing of teeth when most crypto cultists realize they ended up as the foolish bagholders themselves.
This is an extremely important point.

Even if crypto-currency does have a legitimate use, even if the enthusiasts on this board are RIGHT, it's still all likely to crash hard because there is too much leverage and too many people investing today who have no idea what they are investing in.

Bubbles and crashes are feedback loops. Once a bunch of people panic and sell, that drives that price lower, which causes another group to panic and sell, and so on. Anything that has a rapid bubble rise from a positive feedback loop bringing in unsophisticated investors, by definition, already has the necessary conditions and type of people involved for a rapid crash to happen as well.
Everyone buying crypto has faith that another greater fool will come along.

Moral hazard is rampant. My guess is people truly believe the Fed will buy their dog coins to prevent their crash.
Green Street wrote: Sun May 09, 2021 2:46 pm Just like the equities market is bound to crash right, oh no more bubbles!
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Re: Crypto mania !

Post by Green Street »

HomerJ wrote: Sun May 09, 2021 2:49 pm
Green Street wrote: Sun May 09, 2021 2:46 pm
HomerJ wrote: Sun May 09, 2021 2:44 pm
Janus887 wrote: Sun May 09, 2021 2:14 pmIn contrast, the average post-2017 crypto buyer (and especially 2021 buyers) have one reason and one reason alone for joining the crypto cult: because crypto only goes up. Since we all know this is a fact, why wouldn't we buy as much crypto as we can afford, right? We will get rich! Everyone is getting rich off crypto! It's great. You may consider yourself a sophisticated buyer who is carefully examining long term financial and technological trends. But you're riding in the same train car as the guy who YOLOed his stimmy check on dogecoin for "teh lulz".

So what does this mean, from a practical perspective? It means that when this crypto bubble pops the unwinding will be reminiscent of Hobbes' life of man: nasty, brutish and short. The vast majority of people holing crypto have no faith in it as anything except a token which they can exchange in the future for a higher amount of fiat than which they originally paid for it. Once that illusion is shattered the stampede for the exits will be one for the history books, as the dawning realization spreads that everyone exchanged their dollars for bits on a computer screen, solely for the purpose of selling those bits to some other foolish bagholder for more dollars at some point in the future. There will be much wailing and gnashing of teeth when most crypto cultists realize they ended up as the foolish bagholders themselves.
This is an extremely important point.

Even if crypto-currency does have a legitimate use, even if the enthusiasts on this board are RIGHT, it's still all likely to crash hard because there is too much leverage and too many people investing today who have no idea what they are investing in.

Bubbles and crashes are feedback loops. Once a bunch of people panic and sell, that drives that price lower, which causes another group to panic and sell, and so on. Anything that has a rapid bubble rise from a positive feedback loop bringing in unsophisticated investors, by definition, already has the necessary conditions and type of people involved for a rapid crash to happen as well.
Just like the equities market is bound to crash right, oh no more bubbles!
How old are you?
Old enough to know I can’t call market tops, you?
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HanSolo
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Re: Crypto mania !

Post by HanSolo »

cogito wrote: Sat May 08, 2021 9:08 pm Unfortunately, this board has been consistently wrong on crypto, for years, and it really comes across as jealous and out-of-touch. I don't drop into threads on Gold and TIPS to dunk on investors with FUD, misinformation, and willful ignorance, but crypto just gets under the skin of some posters here in a way I don't understand....

Ah well, at the end of the day we all have to invest according to our own convictions. The disappointing part is that the intelligence of the posters here could make the crypto discussions here some of the best on the internet, instead of the worst. Although I suppose it's still better than crypto twitter...
Since we're talking about talking about the topic, I'll respond to the above. Like you, I'm interested in intelligent discussion. And, like you, I've observed less-than-intelligent (and in some cases, less-than-factual, less-than-genuine, less-than-respectful, etc.) commentary. Unlike you, I've observed it coming from both sides.

In my opinion, if you're implicating only one side in being guilty of unconstructive input, then that's also unconstructive, as it's biased in a way that does not reflect the reality of what's happening here.
txhill wrote: Sun May 09, 2021 1:20 pm Perfectly fine to be restrained in your investment strategy, but I think it's unfair to be so condescending....
There's a lesson in the above for people on both sides of the issue.
Janus887 wrote: Sun May 09, 2021 2:14 pm One of the dumbest people I know (not trying to be cruel with that assessment, just think of the type of person who consistently makes poor decisions and is generally their own worst enemy in every aspect of life) recently told me that she is now "investing" in crypto. This woman could not explain to you the difference between a stock and a bond with a gun to her head. Yet we must now count her among those of us who are savvy and sophisticated enough to recognize the value and future potential of crypto.
It's interesting that pro-crypto people object when those who are not experts in crypto comment on crypto, while having no objection when large numbers of those who are not experts in crypto put their hard-earned money into crypto.

I'm not saying that's right or wrong. It's just an interesting asymmetry.
txhill wrote: Sun May 09, 2021 2:29 pm I think the real question is whether the mania around crypto assets is leading to useful innovation (like the internet, which went through plenty of mania but still ended up dominating the economy) or whether it is pure speculative nonsense (like tulips).
I agree that the above is a relevant question. If we use the Internet as an analogy to where crypto is going, then it should be noted that the Internet has its good points and bad points, and one economic effect is that it's resulted in an enormous concentration of wealth and power in the hands of a few companies.
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Re: Crypto mania !

Post by Janus887 »

When I was a boy I remember my grandfather sharing an old quote with me: "You can't cheat an honest man." At the time I didn't really understand the meaning behind it. Surely honest men could be cheated, just like anyone else, right? And didn't the culpability lie with the dishonest man who was doing the cheating, rather than the innocent victim who believed him? But as I got older I came to understand the meaning behind this quote and respect the truth it contained. You can't cheat an honest man. And why not? Because the honest man knows there is no free lunch. He knows what is too good to be true. He isn't going to be swindled by a conman promising him exorbitant returns, because he would never entertain a conman to begin with. The honest man is too busy working and applying his mental and physical energy towards practical efforts to benefit himself, his family and his community. He is not interested in foolish schemes to turn a quick buck, because he knows that everything of real, lasting value in life only comes through hard work and dedication over long periods of time. Anyone telling you otherwise is blowing smoke. Anyone promising you quick riches on a sure thing investment is looking to take your money and run. The honest man can't be cheated, because the honest man is himself never looking to cheat. He's not looking for a shortcut. And so the conman has no point of entry with such a man. He might as well be selling ice to an Eskimo. And so the truism stands: you can't cheat an honest man.

This pithy saying contains the essence of the Boglehead investment philosophy, and stands as stark antithesis to the current cryptomania. The world is filled with dishonest men who seek a shortcut to riches. Such men are easy prey to shysters and conmen of every stripe. It has always been, and so it shall always be. The fundamental truth that wealth is ultimately a product of hard work and discipline escapes the dishonest man. Or perhaps it just rankles him. Either way, he rejects it entirely. Surely there must be a better way! A quicker one! Surely if he is only clever enough he can figure out a way! The conman exploits his mark's weaknesses. Flattering his vanity by ensuring him that he is very clever indeed to recognize the potential of this wonderful investment. Stoking his greed by promising the enormous returns to come. Playing up his fear of missing out, reminding him of all the easy money so many others have already made. This is what is currently happening with crypto. The fact that people would like to convince themselves otherwise is to be expected, as exactly no one in the history of humanity has ever deliberately handed their hard-earned money over to a conman with the express intention of losing it all. And yet it's a tale as old as time.

Wealth comes from the application of human effort toward solving meaningful problems. Building a bridge creates wealth. Teaching a child practical skills creates wealth. Creating a business that meets human need creates wealth. Scientific and technological breakthroughs create wealth. Crypto does not create wealth. At best, crypto can function as a replacement or alternative for certain types of existing financial technology, which themselves also do not and cannot create wealth. Those who promote crypto have mistaken the ends for the means: they look at the bank account of the wealthy entrepreneur and exclaim, "There is wealth!" while ignoring the decades of hard work and the physical and human infrastructure that actually underlies that wealth. In other words, Jeff Bezos is not wealthy because he's worth over $100 billion. He's worth over $100 billion because his business created extraordinary wealth.

There is nothing that BTC or ETH can do do generate real wealth, because they solve no real problems. All this talk about the wonders of the blockchain and smart contracts and decentralized finance is nothing but hot air. There is nothing actually on offer here. These are buzzwords. You are reading a sales brochure. We are told that cryptocurrency is revolutionary because it will allow currently unbanked third world people access to a functional fincancial system. This sounds amazing! Of course, one then wonders what exactly an impoverished third world individual is going to deposit into his crypto account in the first place, but we are told this is just "FUD" and to not concern ourselves with such details, as they are sure to come out in the wash at some future date. Whatever is actually valuable in blockchain technology and smart contracts can and will be applied by entities that have nothing to do with BTC or ETH. This glaringly obvious fact is ignored by crypto cultists because their BTC and ETH holdings will not go up if they tell people this. They want you to believe that these are the only games in town. Maybe they are, for now. Just like AltaVista was once the preeminent search engine. And Friendster the preeminent social network. Useful ideas and technologies have a way of escaping their points of origin. Real value will not be contained within the bounds of a "crypocurrency". It will spread to other applications. You will not get rich by HODLing onto a useless crypto wallet. You will get left holding the bag.
vwgrrc
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Re: Crypto mania !

Post by vwgrrc »

txhill wrote: Sun May 09, 2021 2:29 pm
Janus887 wrote: Sun May 09, 2021 2:14 pm One of the dumbest people I know (not trying to be cruel with that assessment, just think of the type of person who consistently makes poor decisions and is generally their own worst enemy in every aspect of life) recently told me that she is now "investing" in crypto. This woman could not explain to you the difference between a stock and a bond with a gun to her head. Yet we must now count her among those of us who are savvy and sophisticated enough to recognize the value and future potential of crypto.

What is going on here, exactly? Has the investment world been turned on its head? Do the old rules no longer apply? Is crypto a once-in-a-lifetime financial revolution that will topple the financial oligarchs and make the common man rich?

No, no and no. We have been down this road before. The details change but the game remains the same. We are simply experiencing the late stages of a bubble. This bubble has been amplified by the fact that it is also inherently a pyramid scheme, in which earlier participants are themselves directly enriched by recruiting others to join them in the scheme (by bidding up the price of the crypto they are currently holding/mining). Because it is entirely devoid of practical value, crypto depends on proselytizing new converts to join the fold in order to continue appreciating. Early on, the only people interested in joining the crypto cult were those enamored with the underlying blockchain technology itself. These were joined shortly thereafter by hardcore libertarian/anarchist types who were convinced that digital money would free them from living under the oppressive thumb of governments and central banks. Over the following years a small contingent of forward-thinking speculators acquired crypto positions, and until the 2017 run-up began this was core constituency of crypto "hodlers".

In contrast, the average post-2017 crypto buyer (and especially 2021 buyers) have one reason and one reason alone for joining the crypto cult: because crypto only goes up. Since we all know this is a fact, why wouldn't we buy as much crypto as we can afford, right? We will get rich! Everyone is getting rich off crypto! It's great. You may consider yourself a sophisticated buyer who is carefully examining long term financial and technological trends. But you're riding in the same train car as the guy who YOLOed his stimmy check on dogecoin for "teh lulz".

So what does this mean, from a practical perspective? It means that when this crypto bubble pops the unwinding will be reminiscent of Hobbes' life of man: nasty, brutish and short. The vast majority of people holing crypto have no faith in it as anything except a token which they can exchange in the future for a higher amount of fiat than which they originally paid for it. Once that illusion is shattered the stampede for the exits will be one for the history books, as the dawning realization spreads that everyone exchanged their dollars for bits on a computer screen, solely for the purpose of selling those bits to some other foolish bagholder for more dollars at some point in the future. There will be much wailing and gnashing of teeth when most crypto cultists realize they ended up as the foolish bagholders themselves.

Perhaps the popping of the current crypto bubble will actually serve as the regulatory impetus for governments to move in and take over the crypto market with their own digital currencies. Much easier to ban cryptocurrencies in the wake of a >90% crash that at this point would doubtless send shockwaves through the entire financial system. Bye bye, Bitcoin and Ethereum. Hello digi-yuan and fedcoin. For all we know this was always the plan. Who is Satoshi Nakamoto, anyway?

I don't know when this epic crypto crash will happen, but it will, as surely as Spring follows Winter. Technologies and economies change, but men don't. A combination of greed and laziness has always driven us to seek out ways to get rich with the least amount of effort possible. Crypto speculation is merely the latest manifestation of this age-old vice. And vices are always punished sooner or later.
Some of the dumbest people I know happen to own land that has oil under it. They're not geniuses but they sure are rich. Sometimes being lucky is more valuable than being smart.

I think the real question is whether the mania around crypto assets is leading to useful innovation (like the internet, which went through plenty of mania but still ended up dominating the economy) or whether it is pure speculative nonsense (like tulips). That's where I think it is worth digging a bit further. You will find that there is a lot of actual use cases already at work in decentralized finance and NFTs, and there is a tremendous amount of intellectual capital directed at the space--an indicator of innovation to come.

You might be right that an epic crash is on its way, but I think you are making a VERY bold statement if you are saying that there are literally no use cases for crypto. Because that's already not true. Whether the size of that market can grow, we'll just have to see.
As a person who works for a big name in the financial service industry, I can confirm this is very true and is currently ramping up quickly, even though we (my employer) are not a fan of DeFi needless to say.
hilink73
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Re: Crypto mania !

Post by hilink73 »

Janus887 wrote: Sun May 09, 2021 4:02 pm When I was a boy I remember my grandfather sharing an old quote with me: "You can't cheat an honest man." At the time I didn't really understand the meaning behind it. Surely honest men could be cheated, just like anyone else, right? And didn't the culpability lie with the dishonest man who was doing the cheating, rather than the innocent victim who believed him? But as I got older I came to understand the meaning behind this quote and respect the truth it contained. You can't cheat an honest man. And why not? Because the honest man knows there is no free lunch. He knows what is too good to be true. He isn't going to be swindled by a conman promising him exorbitant returns, because he would never entertain a conman to begin with. The honest man is too busy working and applying his mental and physical energy towards practical efforts to benefit himself, his family and his community. He is not interested in foolish schemes to turn a quick buck, because he knows that everything of real, lasting value in life only comes through hard work and dedication over long periods of time. Anyone telling you otherwise is blowing smoke. Anyone promising you quick riches on a sure thing investment is looking to take your money and run. The honest man can't be cheated, because the honest man is himself never looking to cheat. He's not looking for a shortcut. And so the conman has no point of entry with such a man. He might as well be selling ice to an Eskimo. And so the truism stands: you can't cheat an honest man.

This pithy saying contains the essence of the Boglehead investment philosophy, and stands as stark antithesis to the current cryptomania. The world is filled with dishonest men who seek a shortcut to riches. Such men are easy prey to shysters and conmen of every stripe. It has always been, and so it shall always be. The fundamental truth that wealth is ultimately a product of hard work and discipline escapes the dishonest man. Or perhaps it just rankles him. Either way, he rejects it entirely. Surely there must be a better way! A quicker one! Surely if he is only clever enough he can figure out a way! The conman exploits his mark's weaknesses. Flattering his vanity by ensuring him that he is very clever indeed to recognize the potential of this wonderful investment. Stoking his greed by promising the enormous returns to come. Playing up his fear of missing out, reminding him of all the easy money so many others have already made. This is what is currently happening with crypto. The fact that people would like to convince themselves otherwise is to be expected, as exactly no one in the history of humanity has ever deliberately handed their hard-earned money over to a conman with the express intention of losing it all. And yet it's a tale as old as time.

Wealth comes from the application of human effort toward solving meaningful problems. Building a bridge creates wealth. Teaching a child practical skills creates wealth. Creating a business that meets human need creates wealth. Scientific and technological breakthroughs create wealth. Crypto does not create wealth. At best, crypto can function as a replacement or alternative for certain types of existing financial technology, which themselves also do not and cannot create wealth. Those who promote crypto have mistaken the ends for the means: they look at the bank account of the wealthy entrepreneur and exclaim, "There is wealth!" while ignoring the decades of hard work and the physical and human infrastructure that actually underlies that wealth. In other words, Jeff Bezos is not wealthy because he's worth over $100 billion. He's worth over $100 billion because his business created extraordinary wealth.

There is nothing that BTC or ETH can do do generate real wealth, because they solve no real problems. All this talk about the wonders of the blockchain and smart contracts and decentralized finance is nothing but hot air. There is nothing actually on offer here. These are buzzwords. You are reading a sales brochure. We are told that cryptocurrency is revolutionary because it will allow currently unbanked third world people access to a functional fincancial system. This sounds amazing! Of course, one then wonders what exactly an impoverished third world individual is going to deposit into his crypto account in the first place, but we are told this is just "FUD" and to not concern ourselves with such details, as they are sure to come out in the wash at some future date. Whatever is actually valuable in blockchain technology and smart contracts can and will be applied by entities that have nothing to do with BTC or ETH. This glaringly obvious fact is ignored by crypto cultists because their BTC and ETH holdings will not go up if they tell people this. They want you to believe that these are the only games in town. Maybe they are, for now. Just like AltaVista was once the preeminent search engine. And Friendster the preeminent social network. Useful ideas and technologies have a way of escaping their points of origin. Real value will not be contained within the bounds of a "crypocurrency". It will spread to other applications. You will not get rich by HODLing onto a useless crypto wallet. You will get left holding the bag.
What happened?
And how can we help?
hilink73
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Re: Crypto mania !

Post by hilink73 »

vwgrrc wrote: Sat May 08, 2021 11:43 pm
watchnerd wrote: Sat May 08, 2021 11:38 pm
bogledogle wrote: Sat May 08, 2021 11:02 pm more interesting than threads about multi millionaires driving 12 yr old cars or oil change threads due to low mileage during covid :D
+1

Do people really just want keep debating:

1. Emergency Funds
2. International vs US only
3. Mortgage as a negative bond

At least my 2% in crypto is providing me entertainment and learning.

I have to admit, the Coinbase Pro trading website is pretty cool, too.
4. Index > Active
5. Total market > SCV
txhill
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Re: Crypto mania !

Post by txhill »

Janus887 wrote: Sun May 09, 2021 4:02 pm When I was a boy I remember my grandfather sharing an old quote with me: "You can't cheat an honest man." At the time I didn't really understand the meaning behind it. Surely honest men could be cheated, just like anyone else, right? And didn't the culpability lie with the dishonest man who was doing the cheating, rather than the innocent victim who believed him? But as I got older I came to understand the meaning behind this quote and respect the truth it contained. You can't cheat an honest man. And why not? Because the honest man knows there is no free lunch. He knows what is too good to be true. He isn't going to be swindled by a conman promising him exorbitant returns, because he would never entertain a conman to begin with. The honest man is too busy working and applying his mental and physical energy towards practical efforts to benefit himself, his family and his community. He is not interested in foolish schemes to turn a quick buck, because he knows that everything of real, lasting value in life only comes through hard work and dedication over long periods of time. Anyone telling you otherwise is blowing smoke. Anyone promising you quick riches on a sure thing investment is looking to take your money and run. The honest man can't be cheated, because the honest man is himself never looking to cheat. He's not looking for a shortcut. And so the conman has no point of entry with such a man. He might as well be selling ice to an Eskimo. And so the truism stands: you can't cheat an honest man.

This pithy saying contains the essence of the Boglehead investment philosophy, and stands as stark antithesis to the current cryptomania. The world is filled with dishonest men who seek a shortcut to riches. Such men are easy prey to shysters and conmen of every stripe. It has always been, and so it shall always be. The fundamental truth that wealth is ultimately a product of hard work and discipline escapes the dishonest man. Or perhaps it just rankles him. Either way, he rejects it entirely. Surely there must be a better way! A quicker one! Surely if he is only clever enough he can figure out a way! The conman exploits his mark's weaknesses. Flattering his vanity by ensuring him that he is very clever indeed to recognize the potential of this wonderful investment. Stoking his greed by promising the enormous returns to come. Playing up his fear of missing out, reminding him of all the easy money so many others have already made. This is what is currently happening with crypto. The fact that people would like to convince themselves otherwise is to be expected, as exactly no one in the history of humanity has ever deliberately handed their hard-earned money over to a conman with the express intention of losing it all. And yet it's a tale as old as time.

Wealth comes from the application of human effort toward solving meaningful problems. Building a bridge creates wealth. Teaching a child practical skills creates wealth. Creating a business that meets human need creates wealth. Scientific and technological breakthroughs create wealth. Crypto does not create wealth. At best, crypto can function as a replacement or alternative for certain types of existing financial technology, which themselves also do not and cannot create wealth. Those who promote crypto have mistaken the ends for the means: they look at the bank account of the wealthy entrepreneur and exclaim, "There is wealth!" while ignoring the decades of hard work and the physical and human infrastructure that actually underlies that wealth. In other words, Jeff Bezos is not wealthy because he's worth over $100 billion. He's worth over $100 billion because his business created extraordinary wealth.

There is nothing that BTC or ETH can do do generate real wealth, because they solve no real problems. All this talk about the wonders of the blockchain and smart contracts and decentralized finance is nothing but hot air. There is nothing actually on offer here. These are buzzwords. You are reading a sales brochure. We are told that cryptocurrency is revolutionary because it will allow currently unbanked third world people access to a functional fincancial system. This sounds amazing! Of course, one then wonders what exactly an impoverished third world individual is going to deposit into his crypto account in the first place, but we are told this is just "FUD" and to not concern ourselves with such details, as they are sure to come out in the wash at some future date. Whatever is actually valuable in blockchain technology and smart contracts can and will be applied by entities that have nothing to do with BTC or ETH. This glaringly obvious fact is ignored by crypto cultists because their BTC and ETH holdings will not go up if they tell people this. They want you to believe that these are the only games in town. Maybe they are, for now. Just like AltaVista was once the preeminent search engine. And Friendster the preeminent social network. Useful ideas and technologies have a way of escaping their points of origin. Real value will not be contained within the bounds of a "crypocurrency". It will spread to other applications. You will not get rich by HODLing onto a useless crypto wallet. You will get left holding the bag.
Nicely written. Look, I believe that the majority of portfolios for a majority of people will be best-served by sticking to index investing. But this particular subsection of the forum is for discussing investments and not just repeating the Boglehead three fund portfolio ad nauseam. Most people have some portion of their portfolio that they are comfortable allocating to riskier investments, and I'd never advocate for someone investing in crypto beyond their personal risk tolerance.

But having an inflexible mindset and applying that inflexibility to all things comes with costs. Sure it'll keep you from falling for scams along the way, so for as long as the financial system is stable, thinking like a dinosaur is the way to go and S&P 500 index funds are basically a cheat code. But very occasionally extinction events occur, in which case it really pays not to be a dinosaur.

Bezos is an interesting example to bring up, because Amazon got passed over by the same folks who thought inflexibly about price/earnings ratios and value investing. The internet is a fad, they said. P/E ratios of 800:1 cannot be sustained, they said. And they celebrated every time Amazon dropped 80-90% in price--which I think happened several times. But our society was inexorably moving toward a digital world away from Sears and Blockbusters, and now we know who was right and who was wrong.

Maybe crypto doesn't have as big an impact as the internet, but it is part of the same movement from analog stores of value and financial systems to digital ones. The benefits are obvious: cut out the middleman, reduce costs, and minimize reliance on untrustworthy governments/banks. Whether the financial system is itself useful is debatable--presumably it allocates capital to useful things--but what's not debatable is the size of the global financial system. If a significant portion of financial transactions are settled on Ethereum, a trend we're already seeing, then ETH's valuation is not at all absurd. And if folks start trusting in digital stores of value more so than analog counterparts like gold or cash, then BTC's valuation is not absurd.

The crypto space is full of scams to be sure but I think it's unhelpful to lump everything together as bad/evil/whatever, because some of it is useful and is being used today, and it's not unreasonable to think that they will be more useful over time.
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Re: Crypto mania !

Post by watchnerd »

hilink73 wrote: Sun May 09, 2021 4:31 pm
vwgrrc wrote: Sat May 08, 2021 11:43 pm
watchnerd wrote: Sat May 08, 2021 11:38 pm
bogledogle wrote: Sat May 08, 2021 11:02 pm more interesting than threads about multi millionaires driving 12 yr old cars or oil change threads due to low mileage during covid :D
+1

Do people really just want keep debating:

1. Emergency Funds
2. International vs US only
3. Mortgage as a negative bond

At least my 2% in crypto is providing me entertainment and learning.

I have to admit, the Coinbase Pro trading website is pretty cool, too.
4. Index > Active
5. Total market > SCV
6. Total return > dividend investing
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Re: Crypto mania !

Post by HomerJ »

txhill wrote: Sun May 09, 2021 4:46 pmBezos is an interesting example to bring up, because Amazon got passed over by the same folks who thought inflexibly about price/earnings ratios and value investing. The internet is a fad, they said. P/E ratios of 800:1 cannot be sustained, they said. And they celebrated every time Amazon dropped 80-90% in price--which I think happened several times. But our society was inexorably moving toward a digital world away from Sears and Blockbusters, and now we know who was right and who was wrong.
This is a false characterization.

Very few of the old-timers thought the Internet was a fad. They did say PE ratios of 800:1 cannot be sustained, and they did say don't invest in those companies because they are very risky, and likely to go bankrupt.

And many did. Amazon was not the ONLY stock with PE ratios of 800:1. They said "it's very risky to invest in XXX,YYY,ZZZ,AAA,BBB,CCC,DDD,EEE,FFF".

Just because BBB (Amazon) managed to justify its PE ratio and become profitable (partly by re-inventing itself into hosting Cloud services) doesn't mean the old-timers were wrong.

Back then, it wasn't that easy to pick between XXX, YYY, ZZZ, AAA, BBB, CCC, DDD, EEE, and FFF. Most of those went bankrupt. People who picked wrong lost a lot of money. People who picked right made a lot of money.

People who just bought them all via an index fund got rich. 100% chance of rich, or 20/80 chance of super-rich/poor.

Some people get super-rich trying to pick the next winner, but a lot MORE people lose a ton. We're a conservative bunch here. We're trying to protect the larger group of those who lose a ton, by showing them a solid, safer, more likely way to amass wealth.
Last edited by HomerJ on Sun May 09, 2021 6:54 pm, edited 1 time in total.
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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JohnDindex
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Re: Crypto mania !

Post by JohnDindex »

watchnerd wrote: Sat May 08, 2021 7:20 pm
JohnDindex wrote: Sat May 08, 2021 1:49 pm I happen to have 3 friends who are financial advisors. All 3 of them have told me a similar story in the last 30 days. They have existing clients and new prospects that are crypto millionaires. Too much to write but crazy stories, people in their 30’s worth 4-6 million dollars. The advisors are obviously pushing them to sell enough and invest normally but it’s just insane. Some of them are wanting to double down, pull money from traditional investments, and even use leverage.

One of them said to me: “ I think when this thing pops, it might trigger a collapse in markets etc”

I own no crypto and I have no desire.

What do the bogleheads think? Could a crypto bubble burst cause a financial panic ?
WSJ doesn't think it's a systemic danger yet because the total market cap, $2.4T is still small compared to stocks and bonds.

If it keeps getting bigger, though, the danger will get bigger.

If people are selling stocks to buy crypto that's deflationary for stocks....given current valuations, perhaps not such a bad thing.
2.4 T is a large number. I worry it could be more impactful than come think. What about counterparty risk ? How many have borrowed on margin to buy crypto ?

Long term capital was a big scare, and no where near that big.
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Re: Crypto mania !

Post by HomerJ »

txhill wrote: Sun May 09, 2021 4:46 pmMaybe crypto doesn't have as big an impact as the internet, but it is part of the same movement from analog stores of value and financial systems to digital ones. The benefits are obvious: cut out the middleman, reduce costs, and minimize reliance on untrustworthy governments/banks.
Reduce costs, maybe.

But untrustworthy governments/banks? I feel you have this part exactly backwards. I far more trust existing banks and the government FDIC program with existing laws and regulations than crypto applications that have none of that.
Whether the financial system is itself useful is debatable--presumably it allocates capital to useful things--but what's not debatable is the size of the global financial system. If a significant portion of financial transactions are settled on Ethereum, a trend we're already seeing, then ETH's valuation is not at all absurd.
This part is possible. I question "significant", but we can see.
And if folks start trusting in digital stores of value more so than analog counterparts like gold or cash, then BTC's valuation is not absurd.
BTC can easily be replaced. BTC is missing one key component of gold. Gold is unique. BTC is not. Bitcoin was first, but infinite other crypto-currencies can be created. Better ones with none of the problems of Bitcoin.

First has NEVER been that important in tech. I'm talking the last 200 years, from the time of the first steam engines. First rarely remains dominant.
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: Crypto mania !

Post by watchnerd »

JohnDindex wrote: Sun May 09, 2021 6:42 pm 2.4 T is a large number. I worry it could be more impactful than come think. What about counterparty risk ? How many have borrowed on margin to buy crypto ?

Long term capital was a big scare, and no where near that big.
I doubt if anyone really knows.

There are multiple crypto exchanges in multiple countries.

There are undoubtedly some (possibly big) pools of leverage operating out there outside the visibility of regulators.

If the leverage is extreme enough, and isn't confined to crypto-on-crypto leverage, it may cause systemic blow out and flow over into stocks, too, leaving no easy place to hide.

On the other hand, the retail investors buying meme coins like Doge via Robinhood probably aren't geared.

Will crypto self-implode (a la 2017) if interest rates increasing before the collateral damage gets too big? Who knows....
Last edited by watchnerd on Sun May 09, 2021 7:14 pm, edited 1 time in total.
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Re: Crypto mania !

Post by ballons »

txhill wrote: Sun May 09, 2021 4:46 pm Maybe crypto doesn't have as big an impact as the internet, but it is part of the same movement from analog stores of value and financial systems to digital ones. The benefits are obvious: cut out the middleman, reduce costs, and minimize reliance on untrustworthy governments/banks....
Please explain how you cut out the worthless crypto middleman.
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Re: Crypto mania !

Post by Robot Monster »

HomerJ wrote: Sun May 09, 2021 6:38 pm We're trying to protect the larger group [from] those who lose a ton, by showing them a solid, safer, more likely way to amass wealth.
Solid mission statement right there.
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Re: Crypto mania !

Post by watchnerd »

ballons wrote: Sun May 09, 2021 7:12 pm
txhill wrote: Sun May 09, 2021 4:46 pm Maybe crypto doesn't have as big an impact as the internet, but it is part of the same movement from analog stores of value and financial systems to digital ones. The benefits are obvious: cut out the middleman, reduce costs, and minimize reliance on untrustworthy governments/banks....
Please explain how you cut out the worthless crypto middleman.
Why do I want to cut out the crypto middleman if part of the crypto DeFi revenue stream comes from those fees?

Stellar, for example, is not a free means to transfer remittances from USA to another country. It charges fees.

It's just cheaper than Western Union by a lot.
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Re: Crypto mania !

Post by ballons »

watchnerd wrote: Sun May 09, 2021 7:17 pm
ballons wrote: Sun May 09, 2021 7:12 pm
txhill wrote: Sun May 09, 2021 4:46 pm Maybe crypto doesn't have as big an impact as the internet, but it is part of the same movement from analog stores of value and financial systems to digital ones. The benefits are obvious: cut out the middleman, reduce costs, and minimize reliance on untrustworthy governments/banks....
Please explain how you cut out the worthless crypto middleman.
Why do I want to cut out the crypto middleman if part of the crypto revenue stream comes from those fees?

Stellar, for example, is not a free means to transfer remittances from USA to another country. It charges fees.

It's just cheaper than Western Union by a lot.
"The benefits are obvious: cut out the middleman"

My question is pertaining to a claimed benefit of crypto. If this claim is false, it is not a benefit.
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Re: Crypto mania !

Post by watchnerd »

ballons wrote: Sun May 09, 2021 7:23 pm

"The benefits are obvious: cut out the middleman"

My question is pertaining to a claimed benefit of crypto. If this claim is false, it is not a benefit.
The claim is often false. Maybe it's true sometimes. Or partially true.

The goal isn't really to cut out the middleman entirely.

The goal of DeFi projects is to create a new group of middlemen that can offer as good, or better, of a service as the old guard centralized financial services, at cheaper prices.

It's just classic technology disruption -- provide the same type of service, but try to do it faster, better, cheaper.
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txhill
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Re: Crypto mania !

Post by txhill »

ballons wrote: Sun May 09, 2021 7:23 pm
watchnerd wrote: Sun May 09, 2021 7:17 pm
ballons wrote: Sun May 09, 2021 7:12 pm
txhill wrote: Sun May 09, 2021 4:46 pm Maybe crypto doesn't have as big an impact as the internet, but it is part of the same movement from analog stores of value and financial systems to digital ones. The benefits are obvious: cut out the middleman, reduce costs, and minimize reliance on untrustworthy governments/banks....
Please explain how you cut out the worthless crypto middleman.
Why do I want to cut out the crypto middleman if part of the crypto revenue stream comes from those fees?

Stellar, for example, is not a free means to transfer remittances from USA to another country. It charges fees.

It's just cheaper than Western Union by a lot.
"The benefits are obvious: cut out the middleman"

My question is pertaining to a claimed benefit of crypto. If this claim is false, it is not a benefit.
Just one example: with DeFi you can (and do) have protocols that do not require someone sitting at a desk assessing the credit risk of a borrower. Instead, you have a program that assesses whether the borrower is sufficiently capitalized; if so, they get to borrow, if not, their collateral gets liquidated. It's programmatic--no middleman (unless you consider computer programs to be middlemen). Costs associated with hiring a bunch of people to do a job that in certain instances can be better done by a program? Reduced to the costs associated with someone programming a smart contract that can scale basically infinitely.
txhill
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Re: Crypto mania !

Post by txhill »

HomerJ wrote: Sun May 09, 2021 6:49 pm Reduce costs, maybe.

But untrustworthy governments/banks? I feel you have this part exactly backwards. I far more trust existing banks and the government FDIC program with existing laws and regulations than crypto applications that have none of that.
That is true today for U.S. citizens. Will it be true forever? Probably not; governments come and go over time too, even the U.S. will someday. But you can always count on math---2+2=4 no matter who's in power. And for people who really don't have a trustworthy government--think of the fiasco in Cyprus in 2013 when they confiscated 10% of everyone's bank accounts because the government was in financial trouble. Those people are the primary market today, and they outnumber U.S. citizens by a lot.
BTC can easily be replaced. BTC is missing one key component of gold. Gold is unique. BTC is not. Bitcoin was first, but infinite other crypto-currencies can be created. Better ones with none of the problems of Bitcoin.

First has NEVER been that important in tech. I'm talking the last 200 years, from the time of the first steam engines. First rarely remains dominant.
First isn't important in tech in a general sense, agreed. BTC hasn't so fully established itself that it is incapable of displacement, agreed. But as with money, the network effect is critical. If BTC is sufficiently adopted it'll be extremely difficult to displace as a store of value. I have no doubt though that ETH will surpass it in market value over time given the much larger addressable market.
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HanSolo
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Re: Crypto mania !

Post by HanSolo »

txhill wrote: Sun May 09, 2021 7:48 pm First isn't important in tech in a general sense, agreed. BTC hasn't so fully established itself that it is incapable of displacement, agreed. But as with money, the network effect is critical.
The network effect will be critical only until an "inter-crypto protocol" is invented that provides seamless convertibility between cryptocurrencies. I think that will be a helpful development.

(Did I just invent the concept?)
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