Prove Me Wrong: Cryptocurrencies are NOT good investments

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watchnerd
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by watchnerd »

Here's the DIY hack of an 'index' I'm using to market weight crypto.

It's probably more like the Dow than TSM because the number of holdings is small and I used a bunch of subjective criteria.

Others can hack it differently.

Design notes:

1. BTC and ETH, being the bulk of the cap weight, can be held in a Roth IRA via ETFs.

2. All the lesser coins are at Coinbase.

3. I capped the list at 7 holdings. Why 7? You can get >60% market cap coverage with 7. 5 feels too few. 10 feels like diminishing returns. And, hey, 7 is a lucky number. But maybe you like 9 or 12 better.

4. The market caps were based on Coindesk 20 data:

https://www.coindesk.com/coindesk20

5. Stablecoins were excluded

6. Anything not tradeable at Coinbase was excluded

7. Bitcoin-alikes (LTC, BCH) were excluded, for now.

8. This index captures ~$1.6T of the ~$2.4T crypto market cap, so 66%.


Crypto 7 Cap Index

BTC: 61.09%
ETH: 24.74%
XLM: 4.28%
ADA: 3.36%
LINK: 2.99%
UNI: 2.50%
GRT: 1.04%
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bogledogle
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by bogledogle »

HanSolo wrote: Fri May 07, 2021 11:45 am
My point was that (a) I agree with those who observed that interest in crypto, by and large, has more to do with racking up gains (measured in fiat, no less) than it has to do with anything political or ideological, and (b) of the minority who actually espouse a political or ideological position (such as increasing freedom), some of them betray their own hypocrisy when they complain about the mere existence of alt-coins (like DOGE). If they were really going after freedom, they'd be espousing ideas like those I proposed above... but they don't.
I think we are already seeing ideologies shift and greed take over in the space. When things sour, Folks who control Crypto protocols behave and take similar actions like as controllers of fiat currency. The whole Etherium vs Etherium classic debacle shows that folks can be bailed out and rules can be changed by powerful entities when things don't go as planned.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by HanSolo »

txhill wrote: Fri May 07, 2021 12:26 pm The only thing I don't like is that you keep trying to make a political argument and keep bringing up the same talking points that have no merit (like "no intrinsic value").
Do you have me confused with someone else?

If you can quote something I actually said, and tell me your issue with it, feel free.

Otherwise, I'll assume what I said isn't controversial.

Just to add to what I said earlier: saying "let the buyer beware" isn't the same as "don't buy". If someone made a false statement and I point it out, it creates awareness, and that's my objective. It doesn't mean I'm advocating one action over another.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by DB2 »

I don't like cryptos (I do see them getting banned at some point well down the road) as I view them almost like a lottery ticket.

For sheer fun, I put $1000 into Dogecoin when it was .12 cents. When it went to .30 cents, I took out the principle along with $800 of profit (used for a certification related to my career). The rest is pure gravy and if it went to zero, I wouldn't care as it sits around .60 cents as I type this. I will let it out ride as I believe it's going higher in this insanity as it looks dirt cheap compared to the other bigger crypto names. Anything "share" or coin under $1 always sounds cheap psychologically especially when the others are thousands of dollars, so I think Doge will sail well past $1. But it's pure fun and who knows, maybe it will grow enough for me to buy a new front projector for my theater room (I am a home theater enthusiast) or even pay off my car one day. :happy
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watchnerd
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by watchnerd »

bogledogle wrote: Fri May 07, 2021 12:48 pm

I think we are already seeing ideologies shift and greed take over in the space. When things sour, Folks who control Crypto protocols behave and take similar actions like as controllers of fiat currency. The whole Etherium vs Etherium classic debacle shows that folks can be bailed out and rules can be changed by powerful entities when things don't go as planned.
Time for the "Greed is Good" speech?
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by bogledogle »

watchnerd wrote: Fri May 07, 2021 12:57 pm
bogledogle wrote: Fri May 07, 2021 12:48 pm

I think we are already seeing ideologies shift and greed take over in the space. When things sour, Folks who control Crypto protocols behave and take similar actions like as controllers of fiat currency. The whole Etherium vs Etherium classic debacle shows that folks can be bailed out and rules can be changed by powerful entities when things don't go as planned.
Time for the "Greed is Good" speech?
Ha ha .. I think that would be appropriate. I think the longterm success of crypto currencies is really tied to greed, the more people get greedy and buy into one of them the higher likelihood of success or reduced volatility. But, greed also drives people nuts and makes them start civil wars and fight with each other.

Will a decentralized system that works on trust and belief work in the longterm? If it does, will that look different from what we got today? I don't know - I don't trust people :D 8-)
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watchnerd
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by watchnerd »

DB2 wrote: Fri May 07, 2021 12:53 pm I don't like cryptos (I do see them getting banned at some point well down the road) as I view them almost like a lottery ticket.

For sheer fun, I put $1000 into Dogecoin when it was .12 cents. When it went to .30 cents, I took out the principle along with $800 of profit (used for a certification related to my career). The rest is pure gravy and if it went to zero, I wouldn't care as it sits around .60 cents as I type this. I will let it out ride as I believe it's going higher in this insanity as it looks dirt cheap compared to the other bigger crypto names. Anything "share" or coin under $1 always sounds cheap psychologically especially when the others are thousands of dollars, so I think Doge will sail well past $1. But it's pure fun and who knows, maybe it will grow enough for me to buy a new front projector for my theater room (I am a home theater enthusiast) or even pay off my car one day. :happy
Here's something I'm anecdotally observing on the benefit of a small slice:

Because the volatility of crypto is crazy high, even more than gold, it seems like a little slice adds a lot of portfolio diversification benefits.

And the movements don't seem particularly correlated with some of the usual prime movers (e.g. bond yields), so you get a chaotic asset class with huge beta that bounces around in ways that seem to have low positive / zero / low negative correlation with stocks and bonds.

I could see Risk Parity funds getting deeper into crypto for this reason.
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In Doge We Trust

Post by HanSolo »

DB2 wrote: Fri May 07, 2021 12:53 pm I don't like cryptos (I do see them getting banned at some point well down the road) as I view them almost like a lottery ticket.

For sheer fun, I put $1000 into Dogecoin when it was .12 cents. When it went to .30 cents, I took out the principle along with $800 of profit (used for a certification related to my career).
Sounds cool. In Doge We Trust!

Just curious... is that $800 after taxes, or before?
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by ballons »

watchnerd wrote: Fri May 07, 2021 1:12 pm Here's something I'm anecdotally observing on the benefit of a small slice:

Because the volatility of crypto is crazy high, even more than gold, it seems like a little slice adds a lot of portfolio diversification benefits.

And the movements don't seem particularly correlated with some of the usual prime movers (e.g. bond yields), so you get a chaotic asset class with huge beta that bounces around in ways that seem to have low positive / zero / low negative correlation with stocks and bonds.

I could see Risk Parity funds getting deeper into crypto for this reason.
The people buying crypto don't care about fundamentals, investing, nor the market. This is like looking at a craps table and thinking it is a good long term investment.
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Re: In Doge We Trust

Post by DB2 »

HanSolo wrote: Fri May 07, 2021 1:57 pm
DB2 wrote: Fri May 07, 2021 12:53 pm I don't like cryptos (I do see them getting banned at some point well down the road) as I view them almost like a lottery ticket.

For sheer fun, I put $1000 into Dogecoin when it was .12 cents. When it went to .30 cents, I took out the principle along with $800 of profit (used for a certification related to my career).
Sounds cool. In Doge We Trust!

Just curious... is that $800 after taxes, or before?
Before.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by DB2 »

ballons wrote: Fri May 07, 2021 2:39 pm
The people buying crypto don't care about fundamentals, investing, nor the market. This is like looking at a craps table and thinking it is a good long term investment.
Agreed. The reasoning usually is something along the lines, "we're no longer trusting printed money by the Fed". It's almost mostly a generational thing, i.e., younger.

Mind you, had I put my $1000 into Doge around Jan 1st, it would be worth around $120,000 today.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by watchnerd »

ballons wrote: Fri May 07, 2021 2:39 pm The people buying crypto don't care about fundamentals, investing, nor the market. This is like looking at a craps table and thinking it is a good long term investment.
I don't think the entire market is made of naive newbie investors LOL facerolling their way to gainz.

(although they're probably a decent chunk of it)

BlackRock definitely aren't newbies, although they may have a more tactical POV.

World’s Largest Asset Manager BlackRock Is Trading Bitcoin Futures

https://www.forbes.com/sites/ninabambys ... 0c511e36ce
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by TheBeanCounter »

ballons wrote: Fri May 07, 2021 2:39 pm
watchnerd wrote: Fri May 07, 2021 1:12 pm Here's something I'm anecdotally observing on the benefit of a small slice:

Because the volatility of crypto is crazy high, even more than gold, it seems like a little slice adds a lot of portfolio diversification benefits.

And the movements don't seem particularly correlated with some of the usual prime movers (e.g. bond yields), so you get a chaotic asset class with huge beta that bounces around in ways that seem to have low positive / zero / low negative correlation with stocks and bonds.

I could see Risk Parity funds getting deeper into crypto for this reason.
The people buying crypto don't care about fundamentals, investing, nor the market. This is like looking at a craps table and thinking it is a good long term investment.
*Some people don't care.*

Most assuredly, there are those who have invested in Crypto who are extremely knowledgeable when it comes to fundamentals, investing and the market.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by watchnerd »

I thought this correlation matrix between Bitcoin, Eth, gold, world stocks, and world bonds was interesting.

Short time period, though:

https://www.portfoliovisualizer.com/ass ... &months=36
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by txhill »

watchnerd wrote: Fri May 07, 2021 5:58 pm I thought this correlation matrix between Bitcoin, Eth, gold, world stocks, and world bonds was interesting.

Short time period, though:

https://www.portfoliovisualizer.com/ass ... &months=36
Very nice. Kind of surprised by the BTC-VT correlation, it's higher than I thought I remember seeing it. I did see on I think CNBC today that Doge-BTC has only a 0.02 correlation...
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by danbdzs »

Surprising to see bitcoin-stocks correlation higher than bonds-stocks correlation!!!
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by watchnerd »

danbdzs wrote: Fri May 07, 2021 6:05 pm Surprising to see bitcoin-stocks correlation higher than bonds-stocks correlation!!!
Eth looks to have been a better stock diversifier.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by txhill »

For those interested in earning some yield in as safe a way as possible, I came across this very thorough review--and I mean thorough--of interest-earning options / crypto lending platforms. Seems to like BlockFi, which I've always had good experiences using.

https://prohashing.com/guides/earning-i ... currencies
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by rhoms33 »

txhill wrote: Fri May 07, 2021 6:16 pm For those interested in earning some yield in as safe a way as possible, I came across this very thorough review--and I mean thorough--of interest-earning options / crypto lending platforms. Seems to like BlockFi, which I've always had good experiences using.

https://prohashing.com/guides/earning-i ... currencies
I’ve been using Gemini earn with multiple tokens and have had a good experience. Would have used BlockFi as they pay more, buy as a NY resident it’s restricted.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by ballons »

watchnerd wrote: Fri May 07, 2021 5:06 pm
ballons wrote: Fri May 07, 2021 2:39 pm The people buying crypto don't care about fundamentals, investing, nor the market. This is like looking at a craps table and thinking it is a good long term investment.
I don't think the entire market is made of naive newbie investors LOL facerolling their way to gainz.

(although they're probably a decent chunk of it)

BlackRock definitely aren't newbies, although they may have a more tactical POV.

World’s Largest Asset Manager BlackRock Is Trading Bitcoin Futures

https://www.forbes.com/sites/ninabambys ... 0c511e36ce
Just because smart money plays the same craps table, doesn't mean they see/care about fundamentals or the market either.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by watchnerd »

ballons wrote: Fri May 07, 2021 9:00 pm

Just because smart money plays the same craps table, doesn't mean they see/care about fundamentals or the market either.
I can go with 'don't care', but I don't believe for a minute 'don't see'.

I think BlackRock is fully aware of the risk and speculative nature of crypto plays.

But they're concluding the potential profit and reward outweighs the risk.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by ballons »

TheBeanCounter wrote: Fri May 07, 2021 5:13 pm
ballons wrote: Fri May 07, 2021 2:39 pm
watchnerd wrote: Fri May 07, 2021 1:12 pm Here's something I'm anecdotally observing on the benefit of a small slice:

Because the volatility of crypto is crazy high, even more than gold, it seems like a little slice adds a lot of portfolio diversification benefits.

And the movements don't seem particularly correlated with some of the usual prime movers (e.g. bond yields), so you get a chaotic asset class with huge beta that bounces around in ways that seem to have low positive / zero / low negative correlation with stocks and bonds.

I could see Risk Parity funds getting deeper into crypto for this reason.
The people buying crypto don't care about fundamentals, investing, nor the market. This is like looking at a craps table and thinking it is a good long term investment.
*Some people don't care.*

Most assuredly, there are those who have invested in Crypto who are extremely knowledgeable when it comes to fundamentals, investing and the market.
Smart people play like to play the craps table too.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by ballons »

watchnerd wrote: Fri May 07, 2021 9:03 pm
ballons wrote: Fri May 07, 2021 9:00 pm

Just because smart money plays the same craps table, doesn't mean they see/care about fundamentals or the market either.
I can go with 'don't care', but I don't believe for a minute 'don't see'.

I think BlackRock is fully aware of the risk and speculative nature of crypto plays.

But they're concluding the potential profit and reward outweighs the risk.
To be precise, BlackRock already has some skin in the game through its 16.3% ownership stake in MicroStrategy. MicroStrategy, which trades on Nasdaq NDAQ +0.6%, was the first major company to place bitcoin on its balance sheet and currently holds 91,326 BTC worth $5.37 billion.
https://twitter.com/michael_saylor/stat ... 6986430467
MicroStrategy has purchased an additional ~262 bitcoins for ~$15.0 million in cash at an average price of ~$57,146 per #bitcoin
. As of 3/12/2021, we #hodl ~91,326 bitcoins acquired for ~$2.211 billion at an average price of ~$24,214 per bitcoin. $MSTR
The Blackrock #HODL strategy. Their investments are peanuts because they haven't figured out a way to make sure they won't be a bagholder for this "investment."

I thought crypto and blockchain was supposed to destroy BlackRock. I guess not.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by Micronite »

Prahasaurus wrote: Thu May 06, 2021 12:07 pm I think Bitcoin will go higher, perhaps much higher. I still hold BTC. As DOGE has shown, it's hard to predict price once the feeding frenzy starts. But my personal thinking on Bitcoin has definitely changed of late. Even recently. I am not as bullish as before for a variety of reasons. But again, who knows? I was never bullish on DOGE and here we are. With meme coins it's hard to predict.
Prahasaurus, I’ve got to thank you for your contribution to this forum. I’ve been a crypto skeptic since the beginning until your posts changed my mind about the potential utility.

But with that said, I think you may be underestimating the potential impact of DOGE. Yes, it’s a meme. Yes, it’s a joke. They said the same about Bitcoin too. But unlike other coins, DOGE is a social phenomenon. It’s easy to connect with for the masses who don’t understand crypto. Companies that include it in their marketing are rewarded with a material impact on their balance sheet. This is real value in the sense that it is providing marketing value. I expect many more companies will jump on board.

However, I am still certain that DOGE would be worthless today if Elon wasn’t constantly pumping it. Elon has massive influence. You tend to have that when you build EVs and self-landing rockets. People thought he was joking when he said DOGE would replace the world’s financial system. They also thought Tesla and SpaceX were jokes too. So basically, buying any coin other than DOGE is a bet against Elon, and everyone who bets against Elon loses. Jokes become self-fulfilling prophecies when enough people believe in them.

So my question to you is: how large is the network effect for Ethereum and how difficult will it be to overcome?

Second, how much of your total portfolio (inluding VT) are you dedicating to Ethereum?
YRT70
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by YRT70 »

Micronite wrote: Sat May 08, 2021 6:14 am
Prahasaurus wrote: Thu May 06, 2021 12:07 pm I think Bitcoin will go higher, perhaps much higher. I still hold BTC. As DOGE has shown, it's hard to predict price once the feeding frenzy starts. But my personal thinking on Bitcoin has definitely changed of late. Even recently. I am not as bullish as before for a variety of reasons. But again, who knows? I was never bullish on DOGE and here we are. With meme coins it's hard to predict.
Prahasaurus, I’ve got to thank you for your contribution to this forum. I’ve been a crypto skeptic since the beginning until your posts changed my mind about the potential utility.

But with that said, I think you may be underestimating the potential impact of DOGE. Yes, it’s a meme. Yes, it’s a joke. They said the same about Bitcoin too. But unlike other coins, DOGE is a social phenomenon. It’s easy to connect with for the masses who don’t understand crypto. Companies that include it in their marketing are rewarded with a material impact on their balance sheet. This is real value in the sense that it is providing marketing value. I expect many more companies will jump on board.

However, I am still certain that DOGE would be worthless today if Elon wasn’t constantly pumping it. Elon has massive influence. You tend to have that when you build EVs and self-landing rockets. People thought he was joking when he said DOGE would replace the world’s financial system. They also thought Tesla and SpaceX were jokes too. So basically, buying any coin other than DOGE is a bet against Elon, and everyone who bets against Elon loses. Jokes become self-fulfilling prophecies when enough people believe in them.
Interesting perspective. That bolded part doesn't go for Bitcoin though, does it? How much DOGE and BTC does he/Tesla own?
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by Prahasaurus »

Micronite wrote: Sat May 08, 2021 6:14 am
Prahasaurus wrote: Thu May 06, 2021 12:07 pm I think Bitcoin will go higher, perhaps much higher. I still hold BTC. As DOGE has shown, it's hard to predict price once the feeding frenzy starts. But my personal thinking on Bitcoin has definitely changed of late. Even recently. I am not as bullish as before for a variety of reasons. But again, who knows? I was never bullish on DOGE and here we are. With meme coins it's hard to predict.
Prahasaurus, I’ve got to thank you for your contribution to this forum. I’ve been a crypto skeptic since the beginning until your posts changed my mind about the potential utility.

But with that said, I think you may be underestimating the potential impact of DOGE. Yes, it’s a meme. Yes, it’s a joke. They said the same about Bitcoin too. But unlike other coins, DOGE is a social phenomenon. It’s easy to connect with for the masses who don’t understand crypto. Companies that include it in their marketing are rewarded with a material impact on their balance sheet. This is real value in the sense that it is providing marketing value. I expect many more companies will jump on board.

However, I am still certain that DOGE would be worthless today if Elon wasn’t constantly pumping it. Elon has massive influence. You tend to have that when you build EVs and self-landing rockets. People thought he was joking when he said DOGE would replace the world’s financial system. They also thought Tesla and SpaceX were jokes too. So basically, buying any coin other than DOGE is a bet against Elon, and everyone who bets against Elon loses. Jokes become self-fulfilling prophecies when enough people believe in them.

So my question to you is: how large is the network effect for Ethereum and how difficult will it be to overcome?

Second, how much of your total portfolio (inluding VT) are you dedicating to Ethereum?
Thanks for your kind words.

I am not underestimating DOGE any more! Quite the opposite. I have clearly underestimated it previously. Fun fact: I was mining DOGE around 2014 or so, just for fun. I no longer have that wallet, can't even remember how many coins I had. Not a lot, but definitely in the thousands. My point with DOGE is that it has shown me the weakness of BTC if it relies purely on its meme.

Yes, the Bitcoin meme is so very serious, but is that a good thing for a market geared (for now) towards the young? And what happens when your meme is destroyed? What utility will prop your token up? I think this is a serious question, because sooner or later (in my opinion) Ethereum will surpass Bitcoin in total market cap. That could be catastrophic for the "hard money" meme, when BTC is no longer number 1.

This was never an issue for Ethereum, because ETH has a ton of utility. Most of DeFi is powered by ETH. NFT's. Gaming (decentraland). Decentralized social networks.

As to Ethereum's network effects and difficulty to overcome, that's the 50 trillion dollar question. In the short term, I have no doubt two things will happen:

1 - Ethereum will remain by far the most used blockchain by almost every measure, with the most applications, developers, etc.

2 - In spite of that, we will see more and more chains rise up a bit and start to provide their own applications, e.g. Polkadot, Cosmos, Binance (a fork of Ethereum), etc. And projects like Ren and Rune should thrive since they help tie these chains together (move assets cross chain). In other words, we'll see a multi-chain world, with Ethereum dominating. Think of a solar system, with Ethereum as the sun.

I am fairly confident because that is what is happening now. I'm not really predicting the future, but the present. Not convinced? See here: https://cryptofees.info

Ethereum is number 1, way beyond Bitcoin. But, every project highlighted in pink is running on Ethereum, as well! So total domination.

Ethereum is about 1/3 of my total net worth (including my home, which we bought in cash last year). :shock: That is how strongly I believe in Ethereum. I'm over 50, by the way. I'm not a kid in my parent's basement, gambling their money.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by Forester »

Crypto pumpers wanted institutionalisation of the crypto space as a means to rope in more buyers. But they want to have their cake and eat it, they're happy for the taxpayer to fund the regulation & oversight of crypto, but they wish to have tax-free gains. The amount of crypto money tied up in ostensibly respectable mainstream funds, makes crypto "currencies" very vulnerable in a GFC / Covid type of broad sell off, and to regulators who take a dim view of tax dodging. For example, the Bitcoin gains of $10,000 plus will prove more ephemeral than the rise from zero to $1,000, which flew under the radar.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by l1am »

Prahasaurus wrote: Sat May 08, 2021 7:12 am Ethereum is number 1, way beyond Bitcoin. But, every project highlighted in pink is running on Ethereum, as well! So total domination.

Ethereum is about 1/3 of my total net worth (including my home, which we bought in cash last year). :shock: That is how strongly I believe in Ethereum. I'm over 50, by the way. I'm not a kid in my parent's basement, gambling their money.
I wrote up a really long response to you and then my browser closed. Anyway, I'll write a shorter version.

Thanks for your posts, I think you and I are quite similar. When did you first invest in Ethereum?

I researched it in mid-2017, and was fascinated by the tech so I bought then. I've lived through huge paper profits, and then losses. I was certainly skeptical of a lot of dApp projects that came out (were they really better decentralized?), but felt that buying the infra/platform I could benefit from any future innovation and creativity in the space. It's almost like buying the index fund for deFi.

I actually researched BTC 5 years earlier, but didn't invest unfortunately. I felt that the govt threat was too high, but I've been pleasantly surprised by most govt responses. In late-2017, I bought BTC as a volatility hedge (sounds weird I know, but back then BTC pumps just ate up market cap of other coins).

ETH is ~10% of my NW (same as BTC). I'm in my late 30's.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by Micronite »

YRT70 wrote: Sat May 08, 2021 6:18 am
Micronite wrote: Sat May 08, 2021 6:14 am.
However, I am still certain that DOGE would be worthless today if Elon wasn’t constantly pumping it. Elon has massive influence. You tend to have that when you build EVs and self-landing rockets. People thought he was joking when he said DOGE would replace the world’s financial system. They also thought Tesla and SpaceX were jokes too. So basically, buying any coin other than DOGE is a bet against Elon, and everyone who bets against Elon loses. Jokes become self-fulfilling prophecies when enough people believe in them.
Interesting perspective. That bolded part doesn't go for Bitcoin though, does it? How much DOGE and BTC does he/Tesla own?
Good point. Although he is more focused on DOGE than Bitcoin at the moment he could pump either one. Maybe he sees the social impact of DOGE being an important factor.

He doesn’t mention Ethereum for some reason though. But still, network effects are very difficult to overcome when they are large enough. For example, I don’t think it’s possible for Elon to overthrow Microsoft or Apple.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by watchnerd »

Re: IRR

There seems to have been a lot of talking past each other on this issue, so jotting some notes.

Two obvious methods I see right now for a $ investment in a crypto asset to earn an internal return, if the asset is put to work:

1. Staking.

As a financial analogy (not at all description of what's happening, technically), it's similar to holding a bond or CD or other fixed income asset.

You earn APR.

But where does the return come from?

This video helps explain:

https://www.youtube.com/watch?v=sF3WIjX ... fromCrypto

2. Crypto fees.

This is pretty straight forward -- it's like a toll road.

Traffic / usage on the network has real-world costs and the users have to pay fees to use the network and software components.

=====

A lot of the messiness and confusion is Bitcoin's fault and its positioning of itself as a replacement for fiat money.

When, in reality, a decent chunk of the crypto / DeFi space consists of software developers trying to build new products and services that provide improved financial services to regular end-users of fiat money.

The 'legit' coin economy can, in some ways, be thought of as just a way to finance software development work; there is nothing new about this concept, but the coin economy allows some of that cost to be crowdsourced.

Meme coins, though.....that's something else entirely.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by stevenedklaus »

Prahasaurus - thank you for your contributions. I believe ETH has a strong case going forward as well, however how do you see a similar high performance blockchain, Solana? From what I’ve read, it seems that SOL may be the better product over ETH, incl ETH2.0.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by Prahasaurus »

l1am wrote: Sat May 08, 2021 1:11 pm
Prahasaurus wrote: Sat May 08, 2021 7:12 am Ethereum is number 1, way beyond Bitcoin. But, every project highlighted in pink is running on Ethereum, as well! So total domination.

Ethereum is about 1/3 of my total net worth (including my home, which we bought in cash last year). :shock: That is how strongly I believe in Ethereum. I'm over 50, by the way. I'm not a kid in my parent's basement, gambling their money.
I wrote up a really long response to you and then my browser closed. Anyway, I'll write a shorter version.

Thanks for your posts, I think you and I are quite similar. When did you first invest in Ethereum?

I researched it in mid-2017, and was fascinated by the tech so I bought then. I've lived through huge paper profits, and then losses. I was certainly skeptical of a lot of dApp projects that came out (were they really better decentralized?), but felt that buying the infra/platform I could benefit from any future innovation and creativity in the space. It's almost like buying the index fund for deFi.

I actually researched BTC 5 years earlier, but didn't invest unfortunately. I felt that the govt threat was too high, but I've been pleasantly surprised by most govt responses. In late-2017, I bought BTC as a volatility hedge (sounds weird I know, but back then BTC pumps just ate up market cap of other coins).

ETH is ~10% of my NW (same as BTC). I'm in my late 30's.
I bought my first BTC in 2013 or 2014, can't remember. I do remember I paid around 200 USD. I was not investing per se. I thought the technology had a bright future (blockchain), and wanted to play around with the early market leaders. I was definitely thinking Bitcoin would eventually be replaced by something else, like many detractors here still believe, 7 years later... And they may be right, who knows!

I bought some more BTC in 2014 (again, just playing around), but sadly owned a total of about 3 BTC (actually less) moving into 2020. After playing with the technology I thought it was interesting, but not really ready for prime time. So I forgot about it. Then a lot of fortuitous things happened: I started to post here about Bitcoin and was shocked at people's misunderstanding; Covid meant my business slowed considerably and I was no longer on airplanes (lots of free time); and then, like Paul on the road to Damascus, I found Ethereum. :D Or perhaps better said, I finally started to take Ethereum seriously. And so throughout 2020 I started to accumulate crypto. First Bitcoin, then Ethereum. Never making one huge purchase, just many smaller purchases over those 6 months or so. My first purchase of ETH was 32 (for a full node), and I paid around 200 USD. I kept buying in chunks of 32 for some reason... Once I started to acquire ETH, I never again purchased BTC (although I never sold, either). And then I naturally progressed into various Ethereum dApps. Started to get active in DeFi, was blown away, etc., etc.

While it's been an exhilarating ride, I've definitely learned why Boglehead principles are the best, as I don't really want to go through this again. Watching your portfolio fall by the price of your house or more in minutes is a bit stressful, something that seems to happen monthly. I do plan to ease out of crypto later in 2021. Not entirely, of course, that would be crazy. But at least getting back to a manageable allocation within my portfolio (psychologically). It's difficult, because on the one hand, I think crypto is massively undervalued, especially Ethereum. But on the other hand, I don't like that so much of my paper net worth is in one extremely volatile asset class.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by Prahasaurus »

stevenedklaus wrote: Sat May 08, 2021 8:14 pm Prahasaurus - thank you for your contributions. I believe ETH has a strong case going forward as well, however how do you see a similar high performance blockchain, Solana? From what I’ve read, it seems that SOL may be the better product over ETH, incl ETH2.0.
Solana is not going to replace ETH, in my opinion. But it has built a very interesting trading platform, and I think it will continue to do very well in that niche. As I've written before, our future is going to be multi-chain, with assets moving across chain. But you'll notice every new chain like Solana is quick to provide a bridge to Ethereum.

But in general I like Solana more than most of the so called "Eth killers," because Solana are not trying to replace Ethereum, but are laser focused on creating their niche (trading), that can fit within the broader crypto ecosystem. This is a very smart strategy, in my opinion.

Solana's founder, SBF, is a billionaire, and one of the largest contributors to Biden's presidential campaign. So he's clearly smart enough to know he'll need to play nice with regulators. And on Twitter he's already looking for Republicans who want to "get things done," i.e. he's smart enough to know he needs to invest in both political parties.

This also implies that Solana is too centralized (which it is), although I suppose that could be just a phase in the natural progression to better decentralization. Projects that are not decentralized are not the way, but this can take some time. So look out for that, how well is Solana moving to a fully decentralized protocol.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by Micronite »

Any thoughts on Binance? They are building a very large platform similar to Ethereum. The founder is very actively promoting it. I have noticed that many new coins and exchanges are built on Binance now. After talking to many crypto investors, I get the same response from them: "Ethereum gas prices are way too high!"
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by Prahasaurus »

Micronite wrote: Sun May 09, 2021 3:44 am Any thoughts on Binance? They are building a very large platform similar to Ethereum. The founder is very actively promoting it. I have noticed that many new coins and exchanges are built on Binance now. After talking to many crypto investors, I get the same response from them: "Ethereum gas prices are way too high!"
It’s an Ethereum fork. It’s a centralized solution. There are like 20 validations, so it’s in no way decentralized. The ultimate winner in this space won’t be centralized. What’s the point, then? Just run on AWS in that case, call it Bezos Smart Chain and be done with it.

Binance has flourished because Ethereum gas prices are too high. This is being fixed. But small users can’t afford Ethereum now, unless they start on a side chain like Matic. And also Binance can onboard users from their centralized exchange right into their network.

CZ is very charismatic. But just waiting until he’s subpoenaed by Congress, since he’s an easy target. I can’t stress this enough, the ultimate long term winners must be decentralized!

Binance is a starter blockchain for users. Eventually they will move to Ethereum as fees drop.

As to whether BNB is a good investment, who knows? I’m trying to stay focused on long term winners like Ethereum and perhaps Bitcoin.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by YRT70 »

I'm not sure in what thread it was posted but someone had turned 8k into 500k by buying Dogecoin. I hope he sold some in the mean time because DOGE is currently 33% down in 24h after Musk called it a hustle last night on SNL.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by Bobby206 »

Somethingwitty92912 wrote: Mon May 03, 2021 4:04 pm
Bobby206 wrote: Sat May 01, 2021 11:07 am Prove Me Wrong: Cryptocurrencies are NOT good investments

Scoreboard!

Seems to me that shows it's a good investment. I have friends that have become millionaires overnight... well, they are if they sell now. Lol.
Millionaires in what exactly? Oh right… dollars.
This makes no sense. All investments are in what exactly? Oh right... dollars.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by Somethingwitty92912 »

Bobby206 wrote: Sun May 09, 2021 10:25 am
Somethingwitty92912 wrote: Mon May 03, 2021 4:04 pm
Bobby206 wrote: Sat May 01, 2021 11:07 am Prove Me Wrong: Cryptocurrencies are NOT good investments

Scoreboard!

Seems to me that shows it's a good investment. I have friends that have become millionaires overnight... well, they are if they sell now. Lol.
Millionaires in what exactly? Oh right… dollars.
This makes no sense. All investments are in what exactly? Oh right... dollars.
An why do they value things in that currency?
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by chinchin »

Prahasaurus wrote: Sun May 09, 2021 3:58 am


CZ is very charismatic. But just waiting until he’s subpoenaed by Congress, since he’s an easy target. I can’t stress this enough, the ultimate long term winners must be decentralized!
How is Congress going to subpoena CZ, who is not a US national?
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by chinchin »

Somethingwitty92912 wrote: Sun May 09, 2021 10:40 am
Bobby206 wrote: Sun May 09, 2021 10:25 am
Somethingwitty92912 wrote: Mon May 03, 2021 4:04 pm
Bobby206 wrote: Sat May 01, 2021 11:07 am Prove Me Wrong: Cryptocurrencies are NOT good investments

Scoreboard!

Seems to me that shows it's a good investment. I have friends that have become millionaires overnight... well, they are if they sell now. Lol.
Millionaires in what exactly? Oh right… dollars.
This makes no sense. All investments are in what exactly? Oh right... dollars.
An why do they value things in that currency?
I guess VTI isn't a good investment since it's priced in USD.
not financial advice
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by watchnerd »

Somethingwitty92912 wrote: Sun May 09, 2021 11:10 am

Thats called a red herring. VTI IS an investment. Crypto, is a … currency.
Many crypto projects position themselves as currencies.

But a lot do not.

Some are basically just distributed apps that do a single function.

Chainklink is one example:

https://www.coindesk.com/price/chainlink

(Disclosure: Chainlink is not one of the projects I hold)

At this stage the category name "cryptocurrency" can be misleading.

I think Gary Gensler (SEC) understands the distinctions, as he refers to some as 'tokens' and avoids using the word currency for some of them.

https://www.youtube.com/watch?v=6NxD-e4 ... Television
Last edited by watchnerd on Sun May 09, 2021 11:30 am, edited 1 time in total.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by YRT70 »

Prahasaurus wrote: Sun May 09, 2021 3:58 am ...
Prahasaurus, I'm curious for your opinion. I was talking to my friend who I consider quite knowledgeable on investing. I asked him what he thought about Ethereum. This is one of the things he said "They've been claiming they'll move to POS since inception, and still haven't done so. To me the claim is a bait and switch."

Could this be true? That they never move to POS and are only baiting people by saying that they will? Is there any guarantee that they'll move?
Last edited by YRT70 on Sun May 09, 2021 11:39 am, edited 1 time in total.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by watchnerd »

Somethingwitty92912 wrote: Sun May 09, 2021 11:28 am

I mean hell, in this conversation you can’t even tell me what it actually is… is it a currency, an investment, a commodity?
Different crypto projects are analogous to different things.


Bitcoin is likened to "digital gold".

Stellar is a payments network that pitches itself as a cheaper way to do remittances than using ACH, money orders, or wire transfers.

Uniswap is an application token that provides an exchange platform using an automated liquidity protocol.


So the answer to 'what is it' depends entirely on which specific crypto project one is talking about.
Last edited by watchnerd on Sun May 09, 2021 11:42 am, edited 1 time in total.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by Prahasaurus »

YRT70 wrote: Sun May 09, 2021 11:38 am
Prahasaurus wrote: Sun May 09, 2021 3:58 am ...
Prahasaurus, I'm curious for your opinion. I was talking to my friend who I consider quite knowledgeable on investing. I asked him what he thought about Ethereum. This is one of the things he said "They've been claiming they'll move to POS since inception, and still haven't done so. To me the claim is a bait and switch."

Could this be true? That they never move to POS and are only baiting people by saying that they will? Is there any guarantee that they'll move?
Who is "they"?
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by YRT70 »

Prahasaurus wrote: Sun May 09, 2021 11:44 am
YRT70 wrote: Sun May 09, 2021 11:38 am
Prahasaurus wrote: Sun May 09, 2021 3:58 am ...
Prahasaurus, I'm curious for your opinion. I was talking to my friend who I consider quite knowledgeable on investing. I asked him what he thought about Ethereum. This is one of the things he said "They've been claiming they'll move to POS since inception, and still haven't done so. To me the claim is a bait and switch."

Could this be true? That they never move to POS and are only baiting people by saying that they will? Is there any guarantee that they'll move?
Who is "they"?
I'm not sure who he specifically meant but I would guess people involved with Ethereum. Like the Ethereum foundation.

I've been googling for it, here they said it would first happen January 2021: https://www.techradar.com/news/ethereum ... -huge-deal
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by decapod10 »

YRT70 wrote: Sun May 09, 2021 11:51 am
Prahasaurus wrote: Sun May 09, 2021 11:44 am
YRT70 wrote: Sun May 09, 2021 11:38 am
Prahasaurus wrote: Sun May 09, 2021 3:58 am ...
Prahasaurus, I'm curious for your opinion. I was talking to my friend who I consider quite knowledgeable on investing. I asked him what he thought about Ethereum. This is one of the things he said "They've been claiming they'll move to POS since inception, and still haven't done so. To me the claim is a bait and switch."

Could this be true? That they never move to POS and are only baiting people by saying that they will? Is there any guarantee that they'll move?
Who is "they"?
I'm not sure who he specifically meant but I would guess people involved with Ethereum. Like the Ethereum foundation.

I've been googling for it, here they said it would first happen January 2021: https://www.techradar.com/news/ethereum ... -huge-deal
Ethereum 2.0 has been delayed a lot yes, so there is some truth to that. I think initially they were hoping to do it 2 or 3 years ago.

However, I would say now is significantly different than before. Ethereum 2.0 already exists in some form right now (since late 2020). People are already staking thousands of ETH in the ETH 2.0 network.

They "just" need to merge the old ETH network with the new ETH 2.0 network. I say "just" because they is still a lot of work. It still has a chance to fail if something goes wrong, but the timeline is a lot more firm now I think. I could see delays of 1 year, but probably not 5 years. I hear they recently moved up the timeline and hoping to "merge" by the end of 2021.
Last edited by decapod10 on Sun May 09, 2021 12:00 pm, edited 1 time in total.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by txhill »

YRT70 wrote: Sun May 09, 2021 11:51 am
Prahasaurus wrote: Sun May 09, 2021 11:44 am
YRT70 wrote: Sun May 09, 2021 11:38 am
Prahasaurus wrote: Sun May 09, 2021 3:58 am ...
Prahasaurus, I'm curious for your opinion. I was talking to my friend who I consider quite knowledgeable on investing. I asked him what he thought about Ethereum. This is one of the things he said "They've been claiming they'll move to POS since inception, and still haven't done so. To me the claim is a bait and switch."

Could this be true? That they never move to POS and are only baiting people by saying that they will? Is there any guarantee that they'll move?
Who is "they"?
I'm not sure who he specifically meant but I would guess people involved with Ethereum. Like the Ethereum foundation.

I've been googling for it, here they said it would first happen January 2021: https://www.techradar.com/news/ethereum ... -huge-deal
I think you are right to point out some issues with Ethereum leadership. It is a little less decentralized than I’d prefer, and they once very early in the project reversed a lot of transactions due to a glitch. That made me trust Ethereum a lot less at the time. But it seems that they are now on the right track and taking the right steps to encourage development on their network, so I am optimistic. But I also would not bet on a December 2021 transition, it could very well take longer, and could introduce glitches (so I hope they take their time with it). We will see.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by Prahasaurus »

YRT70 wrote: Sun May 09, 2021 11:51 am
Prahasaurus wrote: Sun May 09, 2021 11:44 am
YRT70 wrote: Sun May 09, 2021 11:38 am
Prahasaurus wrote: Sun May 09, 2021 3:58 am ...
Prahasaurus, I'm curious for your opinion. I was talking to my friend who I consider quite knowledgeable on investing. I asked him what he thought about Ethereum. This is one of the things he said "They've been claiming they'll move to POS since inception, and still haven't done so. To me the claim is a bait and switch."

Could this be true? That they never move to POS and are only baiting people by saying that they will? Is there any guarantee that they'll move?
Who is "they"?
I'm not sure who he specifically meant but I would guess people involved with Ethereum. Like the Ethereum foundation.

I've been googling for it, here they said it would first happen January 2021: https://www.techradar.com/news/ethereum ... -huge-deal
Nothing is guaranteed. The idea that this is some kind of major conspiracy is laughable. But I suppose there could be technical issues that cause delays. Unlike almost every other chain, Ethereum is very much decentralized, it has a ton of workable apps live right now and does more transactions than any other blockchain (3-4x more per day than Bitcoin). It's not trivial to move to Proof of Stake. But I'm quite confident it will happen soon, hopefully by year end.

Lots of people throw shade at Ethereum. Bitcoin maximalists, because they see the writing on the wall. And of course investors in the many "Eth killers" that hope to one day replace Ethereum.

I have no crystal ball.
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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by watchnerd »

txhill wrote: Sun May 09, 2021 11:50 am
Ethereum generated $700+ million in revenue in April 2021 on transaction fees from folks using it as a platform for decentralized apps.
Based on the current run-rate, I don't think that's right.

It should be about $100M per month based on the 7 day average.

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Re: Prove Me Wrong: Cryptocurrencies are NOT good investments

Post by LadyGeek »

I removed a contentious interchange. As a reminder, see: General Etiquette
Attacks on individuals, insults, name calling, trolling, baiting or other attempts to sow dissension are not acceptable.

...avoid profanities, obscenities, lewd and otherwise offensive words and remarks
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